|[May 01, 2014]
Fitch: Commercial Auto Insurance Sector Remains Pressured
CHICAGO --(Business Wire)--
The commercial automobile insurance segment of the U.S.
property/casualty insurance industry reported a third consecutive year
of underwriting losses with a combined ratio of 106% for 2013 compared
with 107% for 2012, according to Fitch Ratings.
Results in this key segment are trending differently from other lines.
For example, the property/casualty industry aggregate posted a
significant underwriting gain for 2013, the market's best year since
Commercial auto underwriting losses are a function of multiple years of
significant price deterioration prior to 2011, combined with an erosion
of underwriting standards to retain business in the economic downturn of
2008-2009. Commercial auto policyholders continue to face pressure in
the current slow-growth environment, which limits expansion in
commercial auto underwriting exposures.
Additionally, recent increases in claims severity have sparked a shift
towards loss reserve deficiencies. Incurred losses in accident years
2010-2012 have developed unfavorably since inception for the industry in
commercial auto. Further recognition of inadequate loss reserves is
likely to hinder near-term earnings improvement in this segment.
Premium rate increases in commercial auto insurance have been more muted
versus other underperforming market segments since the commercial lines
underwriting cycle turned in second-half 2011. Signs that the momentum
for further price hikes is waning reduce the likelihood that the
commercial auto line will quickly revert to an underwriting profit
position in 2014.
Despite poor industry performance in commercial auto, a number of
insurers contnue to report strong underwriting results in this line.
Among the leading commercial auto insurance writers, Berkshire Hathaway
Group, Progressive Corp. and Erie Indemnity Company were the most
profitable in the segment during 2009-2013.
For more information on this topic, please see our special report,
"Commercial Auto Insurance Market Update: Underwriting Losses
Accumulate," available at www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit
market commentary page. The original article can be accessed at www.fitchratings.com.
All opinions expressed are those of Fitch Ratings.
Applicable Criteria and Related Research: Commercial Auto Insurance
Market Update (Underwriting Losses Accumulate)
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE
RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR
RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY
CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
[ InfoTech Spotlight's Homepage ]