Challenging 2016 predicted for property/casualty insurersReprints
U.S. commercial property/casualty insurers' 2016 underwriting performance appears likely to fall short of that of recent years, according to an analysis released Tuesday by Fitch Ratings Inc. in Chicago.
More severe catastrophe losses could play a key role in pushing down the insurers' performance, said Fitch in “U.S. Commercial Lines Update.”
“Competitive pressures and limited exposure growth are leading to lower premium growth in commercial lines that will extend through this year,” said Fitch. “Industry loss ratios and underwriting performance are likely to deteriorate modestly in 2016 and forward. A return to more severe catastrophe losses would lead to a sharper decline in results.”
The report noted that continued lower-than-average catastrophe losses were a key factor in commercial property and commercial multiperil lines performance last year. “These segments could swing sharply unfavorably if 2016 catastrophe losses are more severe.”
Workers compensation questions
The report also raised red flags about workers compensation insurance's likely future performance.
Fitch noted that workers compensation — which is the largest commercial insurance line — has experienced steady improvement over the past five years and posted an underwriting profit in 2015.
“Sustainability of this performance is questionable given this line's history of volatility and claims complexity,” Fitch said in its analysis.