Ratings agency A.M. Best Co. said Tuesday it is maintaining its “negative” outlook for the U.S. commercial lines segment for 2021 amid ongoing uncertainties related to COVID-19 and its economic fallout.

Pricing for most lines of U.S. commercial insurance will accelerate in 2021 as insurers face continued pressure from higher reinsurance rates and elevated catastrophe losses, Best said in its report on the sector.

However, economic factors may limit insurers’ ability to increase prices and enforce stricter underwriting practices while maintaining market share, the report found.

The Oldwick, New Jersey-based ratings agency in April had revised its outlook for the U.S. commercial lines segment to negative from stable, reflecting significant uncertainty about the virus and its potential impact on the U.S. economy.

“The uncertainties related to COVID-19 will produce a challenging operating environment for the commercial segment for 2021,” Best said in the report released Tuesday maintaining its negative outlook.

Despite promising news on COVID-19 vaccines and increased confidence that economic conditions will improve, it may be several months until those vaccines are widely available and administered, Best said.

The re-emergence of social inflation as courts re-open, higher reinsurance rates and tighter terms and conditions, and rising loss costs are among the factors that will continue to adversely impact the segment, Best said.

The upward trajectory in pricing continued unabated for most commercial lines this year, particularly for medium and large insureds, Best said.

“Increased reinsurance costs and expected lower future investment income (as interest rates remain low to support economic recovery) are key factors supporting the pricing momentum,” the report said.

Elevated catastrophe losses and the need to bring casualty lines’ pricing in line with long-term loss cost trends are also contributing to insurers’ underwriting discipline.

Insurers also need to take rating and underwriting action to address uncertainty related to secondary perils, such as wildfire, convective storms and flood, Best said.

The legal battle over who ultimately will share in paying for losses associated with COVID-19 is far from over as well.

Beyond the pandemic crisis, the negative factors facing the industry are not expected to be resolved any time soon, Best said.

“Climate risk, social inflation and the persistently low interest rate environment now are firmly established secular trends that the industry will have to negotiate well into the future,” Best said in the report.

However, the segment’s strong risk-adjusted capital base, appropriate enterprise risk management programs and a generally low-risk investment approach “should enable the outlook to be revised to stable as the U.S. business climate returns to a more normal position,” Best said.

More insurance and risk management news on the coronavirus crisis here.