Personal auto insurance profitability on the right track – Triple-I
Personal auto insurance profitability on the right track – Triple-I | Insurance Business America
Motor & Fleet
Personal auto insurance profitability on the right track – Triple-I
Don’t pop the champagne corks just yet
Motor & Fleet
By
Kenneth Araullo
Personal auto insurance underwriting profitability is showing signs of improvement after recent years of record losses, according to the Insurance Information Institute (Triple-I). However, these gains may take time to impact premium rates, the institute noted.
Triple-I reported that auto insurers’ 2023 net combined ratio of 104.9 is 7.3 points better than 2022. Additionally, 2023 net written premium growth of 14.3% is the highest in over 15 years and six points higher than the next-highest during that period, reflecting rate increases to offset inflationary loss costs, according to the “Triple-I Issues Brief, Trends and Insights: Personal Auto Insurance Rates.”
New auto sales in 2023 experienced their best performance in four years, aiding auto insurers’ profitability. However, 2022 was marked by significant underwriting losses. The number of drivers and miles driven have returned to pre-pandemic levels, but risky driving behaviors that led to high losses have not improved, the Issues Brief noted.
Dale Porfilio (pictured above), chief insurance officer at Triple-I and president of the Insurance Research Council (IRC), highlighted the results of the report and noted how telematics can improve driving behavior.
“An IRC survey found 45% of drivers said they made significant safety-related changes in how they drove after participating in a telematics program,” Porfilio said.
Several factors are contributing to the rise in auto insurance premiums. These include rising accident frequency and severity, more fatalities and injuries leading to increased lawsuits, supply-chain issues and high labor costs, and more costly auto repairs due to increased technological sophistication in vehicles.
Last month, the institute posted a warning over a report that shows that while the growth of replacement costs for US property & casualty (P&C) insurance has slowed, this trend is likely to reverse, with P&C replacement costs expected to grow faster than overall inflation by 2026.
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