Why 2016 was a Challenging Year for the Property and Casualty Industry and How to Minimize Insurance Risk Going Forward

There’s no question that 2016 was an extremely challenging year for the property and casualty insurance industry. In fact, according to a recent report from A.M. Best, the industry will likely end up posting a small underwriting loss for 2016. Considering that 2015, 2014, and 2013 were modestly profitable years, posting a loss for 2016 will most certainly hurt.

The first nine months of 2016 were particularly challenging for the industry as indicated by the $1.7 billion net underwriting loss as indicated in a report from ISO and the Property and Casualty Insurers Agency of America. A loss of this magnitude made it nearly impossible for the industry to recover in the remaining three months of 2016.

Why will 2016 likely yield a small underwriting loss?
There are a number of factors that are leading to the property and casualty insurance industry to likely post a small underwriting loss in 2016. First of all, the industry has benefited in years past from more favorable loss reserves. However, given that catastrophe losses in 2016 were at higher than normal levels in comparison to recent years, the loss reserves were not as beneficial.

While the largest contributors to the increase in losses in 2016 were catastrophes and weather, the year also brought an increase in auto liability claims. With lower gasoline prices, more vehicles were on the road in 2016. The combination of an influx of drivers on the road and the increasing trend of distracted drivers lead to higher claims in 2016.

Another key challenge that the property and casualty industry faced in 2016 (and will continue to face in years to come) is a deterioration in underwriting due to increased competition from other insurance carriers. The pressure to remain competitive has caused premiums to decline and loss ratios to increase.

What can you do to protect your bottom line in 2017?
While it’s impossible to anticipate what the year will bring in regards to catastrophes and weather, you can focus on strengthening underwriting to mitigate loss. Our experienced team at Insurance Risk Services has been partnering with insurance carriers in the property and casualty industry for over 35 years to provide underwriting support. Our in-person property inspections and accurate underwriting reports will best help you to determine which risks are worth taking. We understand that you’re also facing pressure to be competitive, which is why our team at Insurance Risk Services uses the latest technology to increase accuracy and responsiveness with our underwriting reports.

Please contact us at Insurance Risk Services to learn more about how we can help you to protect your bottom line in 2017.