P&C mutual insurers continued to increase their premiums in 2020 despite retrocessions

P / C’s U.S. mutuals held firm in 2020 despite the return of significant premium levels during the pandemic. In fact, net premiums written increased 1.4% even with all refunds, according to a new report from AM Best.

AM Best said affected mutuals have seen net premiums written increase every year since 2010. Growth in 2020 was more specific to the pandemic, as the market shifted from greater personal auto risk to greater risk. for owners. The report noted that multiple owner risks increased by $ 2.5 billion while personal auto lines declined by $ 2.6 billion.

The pandemic conditions resulted in a favorable financial shock for personal auto lines as fewer workers commuted. Companies have used a number of financial methods to most efficiently recover their unplanned one-off cash flows from policyholders, with policyholder reimbursements classified as underwriting expenses or, in some cases, as premium balances deducted from other income. AM Best noted.

Decomposed further, including policyholder dividends over the period 2019-2020, the segment recorded underwriting losses of $ 2.3 billion in 2020, up from $ 3.5 billion in 2019. As a result, the Net income declined by less than 4% overall in 2020 - despite the dramatic increase in policyholder dividends and a $ 1.4 billion decline in net investment income and realized capital gains compared to the previous year. last year. Overall, the insured surplus among the assessed population increased 8.4% in 2020 to reach $ 383.1 billion.

The top 10 highest-rated US mutuals AM accounted for 71% of net premiums written in 2020. These large companies generally reported higher incurred loss ratios than their mid-sized counterparts, who in turn reported loss ratios. incurred higher than those of small companies. While small businesses tend to return a greater ratio of earned premiums to their policyholders in policyholder dividends, large corporations were the main drivers of the dramatic increase in 2020, due to their automotive business volumes. more important, said AM Best.

AM Best notes that although the impact of the pandemic on this segment was mitigated in 2020, there was still a big disparity between the experience of automotive and residential lines. Although fewer workers commuted to the worst of the pandemic, improving the performance of the personal auto industry, the overall risk has not gone away. Instead, according to the report, it has moved to the ‘new’ home office, and the dramatic increase in policyholder dividends seen in the first half of 2020 reflects how quickly the risk landscape has shifted. between automotive and owner industries.

Best’s full market segment report is “COVID-19 Forges a Double Edged Sword for U.S. Property and P&C Mutuals. “

Source: AM Best

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Carrier trends Damage price trends