Property & Casualty Insurance Carriers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 2,400 property and casualty insurance carriers in the US underwrite insurance policies that protect policy holders against losses that may occur as a result of property damage or liability. Major types of policies include vehicle property and liability; property and liability; and general liability. Other types of policies sold include health, life, and accident insurance. Large firms may offer reinsurance policies, which limit the amount insurers can lose.

Uncertainty Related to Risk and Losses

Success in the property and casualty insurance business is dependent on a firm’s ability to underwrite and price risk accurately and estimate losses.

Natural Disasters and Other Catastrophes

Damage and destruction due to natural disasters and other catastrophes expose property and casualty insurers to the financial burden of covering massive losses.

Industry size & Structure

The average property and casualty insurance carrier employs about 245 workers and generates $295 million annually.

    • The property and casualty insurance industry consists of about 2,400 firms that employ 588,000 workers and generate almost $708 billion annually.
    • The industry is highly concentrated; the top 50 companies account for about 82% of industry revenue.
    • Large firms include State Farm, Berkshire Hathaway, and Liberty Mutual.
                                Industry Forecast
                                Property & Casualty Insurance Carriers Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                May 20, 2024 - Firms Have Increased Prices
                                • Property and casualty insurance carriers slightly increased their prices during the first quarter of 2024, according to the US Bureau of Labor Statistics (BLS). Property and casualty insurance carrier industry employment decreased slightly during the first quarter of 2024 while wages for nonsupervisory employees increased slightly, according to the BLS.
                                • Increasing loss severity for casualty lines such as commercial auto, professional liability, product liability, and directors and officers (D&O) liability has in most cases outstripped economic inflation by at least double, with social inflation the largest cause of adverse loss development, according to AM Best. Social inflation is a term that describes how insurers’ claims costs are increasing above general economic inflation. This is generally thought to be due to a trend in increasing litigation costs brought by plaintiffs seeking large monetary relief for their injuries. The “social” aspect of the term represents shifting social and cultural attitudes about who is responsible for absorbing risk (the insurer or the plaintiff). The average loss severity increase over the past decade to 2023 in the product liability line, for example, was 20.4%, compared with average annual economic inflation of 2.7%. The AM Best report notes studies that have shown sentiments toward major public corporations have become more unfavorable, allowing attorneys to capitalize on the shifting attitudes. This decrease in confidence in big business and in other institutions (e.g., federal government, banks), is a problem for insurers, AM Best notes, because jury verdicts have shown that many jurors believe that a company bears some responsibility even in cases of injury due to misuse of a product.
                                • Profitability was below US property and casualty insurers' cost of capital in 2023 but strong premium increases, easing claims cost inflation, and higher investment returns began boosting industry results by the second half, according to Swiss Re Institute. The trends are expected to continue in 2024, supporting profitability improvement. Personal lines premiums are increasing faster and easing economic inflation primarily benefits personal lines claims costs while social inflation mostly impacts commercial lines. Swiss Re Institute forecasts industry return on equity at 9.5% in 2024 and 10.0% in 2025, supported by premium growth of 7.0% and 4.5% respectively in these years.
                                • The combination of ongoing climate change and increased commerce along inland waterways could result in greater workers’ compensation exposures, according to Risk & Insurance Magazine. Seamen and other maritime laborers who work daily — often with heavy or dangerous equipment in high-risk environments like tugboats, barges, fishing boats, drilling rigs, and platforms on inland waterways — face a host of workplace hazards. These include diving and dredge accidents, falls, heavy machinery malfunctions, or exposure to toxic chemicals such as asbestos or benzene. Climate change, which is causing extreme rain and flooding and contributing to higher water levels on rivers in some areas while causing drought and low water levels in others, will intensify those risks. Flooding and high-water marks are now happening in more places and more regularly than before, almost without warning, according to Risk & Insurance Magazine. On the other side of the climate change coin, drought is leading to lower water levels and a different set of workers’ compensation exposures. “Historically low water levels in the central US led to extensive delays in transport, barges ran aground and were stuck for weeks, and the transportation supply infrastructure was hobbled,” said Joe Paduda, principal of Health Strategy Associates. “Barges had to be off-loaded while still in transit to enable them to get by shallow areas, increasing potential injuries due to nonstandard loading and unloading operations. “These issues likely led to higher payroll costs and thus higher workers’ comp premiums. It is possible additional injuries occurred,” Paduda said.
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