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Fitch: U.S. Commercial Auto Insurance A Chronic UnderperformerU.S. Commercial auto insurance has evolved into a chronically underperforming product segment for U.S. property/casualty (p/c) insurers, according to Fitch Ratings. While the p/c industry has reported three consecutive years of significant underwriting profits, the commercial auto market reported an underwriting loss for the fifth consecutive year in 2015. Underwriting losses have accelerated with the segment statutory combined ratio rising to approximately 109% for the latest year. The commercial auto combined ratio averaged 106% from 2011-2015. "The poor performance is a reflection of previous overly aggressive pricing in commercial auto and a recent extended period of heightened claims severity, particularly relating to bodily injury claims," said James Auden, Managing Director, Fitch Ratings. Commercial auto written premiums expanded by more than 7% in 2015. Insurers have responded to poorer underwriting results with meaningful repricing and underwriting actions, but rate changes have not kept pace with loss experience. While pricing in the broader commercial lines market is now more competitive with most sectors experiencing flat to declining pricing changes, commercial auto rates are likely to continue to increase significantly in the near term, which should contribute towards better underwriting results in 2016. A shift to underwriting profits may still be several years away. "Despite a poor overall performance and weaker industry profits, a number of companies continue to produce significant underwriting profits in this line," Auden added. Progressive Corporation has grown to become the largest writer of commercial auto business based on net written premiums, while also generating substantial underwriting profits. Berkshire Hathaway, Inc.'s rapid recent expansion in primary commercial lines has not prevented the company from generating underwriting profits in commercial auto. Old Republic International Corp. writes larger account trucking business, yet continues to report consistent modest commercial auto underwriting profits. See the full report 'U.S. Commercial Auto Insurance Market'" by clicking on the link below. Additional information is available at 'www.fitchratings.com'. U.S. Commercial Auto Insurance Update (Profit Struggles Continue) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=880728 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. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE 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 WEBSITE. View source version on businesswire.com: http://www.businesswire.com/news/home/20160428006547/en/ |
