Worth will increase will decelerate in 2022: Fitch – Enterprise Insurance

The property / casualty insurance sector is still well capitalized but will only grow slowly in 2022, Fitch Ratings Inc. announced on Tuesday.

The fundamental industry outlook for U.S. property and casualty insurance is neutral for 2022, Fitch said, adding that the strength of stocks helped insurers to partially offset the persistent low interest rate environment.

Rate increases averaged 10% for the last seven quarters through the end of the third quarter of 2021, an increase of 8.9%.

The gains were most pronounced in the underperforming segments, including commercial real estate, auto and liability. Fitch expects "the extent of rate hikes is likely to decline but will remain positive through 2022".

While the pace of the upward movement in prices “slows”, enough momentum remains to allow the industry's combined ratio to improve moderately to an estimated 97% in 2022.

Low interest rates continued to constrain growth, "but positive investment returns from stock market appreciation continued to fuel net profits, pushing the industry policyholder surplus to new record levels" by the end of the third quarter.

The property / casualty industry's capital position has improved over the past two years, with policyholder surpluses growing over 30% since late 2018 to $ 988 billion on September 30, 2021, ready to service losses.

"The capital strength of the industry and individual insurers provides support for major loss events or a combination of adverse events that can result from catastrophes, economic and investment market turbulence and negative claims experiences," said Fitch.

The rating agency said it believes that "a wider negative change in industry outlook and corporate ratings would most likely be a coincidence of major adverse events such as catastrophe, investment losses, pricing errors, reserve deficits or some other pandemic that would require capital levels in a short period of time."

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