Property/Casualty Insurance Industry’s Surplus Continued to Grow in 2017, Despite 15.8 Percent Drop in Net Income
Private
The industry's net investment income increased to
Losses and loss adjustment expenses (LLAE) rose 8.4 percent in 2017, significantly exceeding the 3.3 percent earned premium growth. The increase in LLAE was driven by catastrophe losses, as three major hurricanes--Harvey, Irma, and Maria--made landfall in
"Three major hurricanes and devastating wildfires resulted in significant underwriting losses for insurers in 2017, suppressing the industry's income but failing to erode its capital. Moreover, investment gains, partially driven by changes in the tax law, drove the industry surplus to a record high. Insurers have a sophisticated protection system that includes reinsurance, insurance-linked securities, and their own capital, supporting their ability to pay claims after significantly worse catastrophes. Still, these catastrophes tested the ability of insurers to serve their customers and highlighted significant coverage gaps in flood insurance today. The reality is that millions of Americans are uninsured or underinsured against flooding, and insurers have a great opportunity to meet these changing needs. Weather events, though, aren't the only perils that concern customers. Cyber risks are threatening businesses of all sizes and are expected to grow rapidly in the coming years. At
"During the second half of 2017, insurers weathered one of the most challenging series of catastrophic loss events in
Fourth-Quarter Results
Insurers' net income after taxes increased to
Their annualized rate of return on average surplus rose to 7.5 percent in fourth-quarter 2017 from 6.3 percent a year earlier.
Net written premiums rose 6.1 percent in fourth-quarter 2017, compared with 2.4 percent in fourth-quarter 2016.
View the full report from ISO and PCI here (https://www.verisk.com/siteassets/media/downloads/insuranceresultsreport2017q4.pdf).
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