Latest Studies

Quarterly P/C industry snapshot: October 2020
Dr. Steven Weisbart
Insurance Information Institute;
October 15, 2020

This report begins with an in-depth analysis of key insurance economic indicators for the property/casualty (P/C) industry. P/C premium growth usually follows nominal GDP, and the 53 Blue Chip forecasts underlying this analysis see a remarkable range for nominal GDP, with a few predicting a recession through 2020:Q4. A bright spot: employment in all four major sectors of the insurance industry continued growing, despite enormous job losses in other industries in 2020:Q2. P/C industry operating ratio fell from 90.6 in 2019:1H to 92.3 in 2020:1H, and natural catastrophe losses rose from $13.8 billion to $24.7 billion in 2020:1H from the same period a year earlier. Economic forces affecting P/C insurance are also addressed, such as commercial property vacancies and hospital care. New vehicle sales are in recession mode, as are private passenger auto premiums. And while nonfarm payroll was down in the second quarter, payroll will likely rebound in 2020:Q3-Q4, as it did in 2008-2009. Also included is a special topic section on residential insurance. Full report

2020 - Commentary on first half financial results
Dr. Steven Weisbart
Insurance Information Institute;
October 27, 2020

The property/casualty (P/C) insurance industry turned in a profitable overall performance in the first half of 2020. Policyholders’ surplus reached a near-record high, and premium growth is now experiencing its longest sustained period of gains in a decade. The second quarter of 2020—which delivered the fastest descent into the steepest U.S. economic contraction since the Great Depression—was not nearly as tough for the financial performance of the P/C insurance industry as had been expected, so the first half overall remains an attractive one. Compared to the first half of 2019, net premium written in the first half of 2020 rose (up 2.8 percent), and net premium earned did likewise (up 2.9 percent over 2019) while losses and loss adjustment expenses barely budged (up 0.8 percent). Surplus rebounded from $771.9 billion at the end of the first quarter 2020, to $825.8 billion. Fundamentally, the P/C insurance industry remains quite strong financially, with capital adequacy ratios remaining high, relative to long-term historical averages. Full report

The National Flood Insurance Program: Challenges and solutions
 American Academy of Actuaries Extreme Events and Property Lines Committee;
October 10, 2020

This report was prepared by the American Academy of Actuaries Flood Insurance Work Group to help Congress and other stakeholders understand the crucial issues related to the National Flood Insurance Program (NFIP) that might inform how the program might be reformed. This lengthy document consists of 13 sections and two appendices, with attention being given to actuarial standards and principles that can be used to reform the NFIP and to understand issues related to privatization. The ability of private insurers to underwrite flood risks has improved significantly in recent years due to advances in computing power and the larger volume of available data, and the industry has developed very useful models that provide sophisticated insights into flood risks, a development that has served to overcome the reluctance of many insurers to write flood policies. The study includes multiple exhibits.  Full report

Cities at risk - Building a resilient future for the world's urban centres
Dr. David Beeton et al.
Lloyd's, Urban Foresight and Newcastle University;
October 01, 2020

This report analyzes current and future risks that cities face and explores how identified threats will impact urban areas. More than half the world's population now lives in urban areas, up from a third in 1950, and is projected to reach two-thirds by 2050. Large cities now account for around 75 percent of global GDP, forecast to rise to more than 85 percent by 2030. As cities continue to grow and develop, the amount of assets at risk is increasing. However, many cities could do more to strengthen their resilience, reduce their risks and protect their economies and populations. Events such as the COVID-19 pandemic has sharpened the world's attention on the capacity of cities to withstand the impacts of systemic risks and has brought into focus the impacts systemic risks can have on our urban areas, with severe economic and social consequences extending across the world. This report is meant to aid city administrators, risk managers, insurers and brokers better understand these risks and provides insight into how these threats could be reduced. Full report

Natural catastrophe resilience remains low as climate risks increase
Lucia Bevere and Jurgen Dornigg
Swiss Re Institute;
October 01, 2020

Insured losses from natural catastrophes in the first half of 2020 were higher than for the same period in 2019 but lower than the average for the last decade. Both the current hurricane and wildfires seasons in North America are expected to greatly increase the insured losses this year and could also expand the global natural disaster protection gap. During 2019 the gap rose to $227 billion, which was a slight increase, compared with the $222 billion gap in 2018, as 76 percent of the global natural catastrophe exposure remained unprotected. The increased volume of insured losses from natural catastrophes during the first half of 2020 is attributed primarily to higher losses from such secondary perils as thunderstorms and floods, which is a trend that is expected to continue in the second half as wildfires burn through large areas of the western U.S. The article includes multiple exhibits. Full report

Emergency Room Treatment in Workers Compensation
National Council on Compensation Insurance (NCCI);
October 23, 2020

This report concludes that the increasing facility costs for hospital emergency room visits have risen at a rate significantly higher than medical inflation, with facility costs rising approximately three times faster than the hospital outpatient price index. The report was based on the NCCI's analysis of workers compensation emergency room costs. Some states have fewer fee schedules or other cost-containment measures which could be a reason that their emergency room costs are increasing faster. Rising transportation costs associated with emergency room visits and an aging workforce may also contribute to increases in emergency room costs. Full report