The US personal insurance sector is poised for improved underwriting performance in 2024, according to Fitch Ratings.

These expectations come as the previous rise in claims severity has subsided due to high inflation and supply chain shortages, and significant price increases have led to rapid growth in written premiums.

In 2023, the U.S. personal lines insurance sector experienced its third consecutive year of underwriting losses, with the combined statutory ratio (CR) declining to 107% from 110% in 2022. Personal lines insurance is the largest property and casualty sector in United States (P&C) insurance market, accounting for more than 51% of industry net written premiums (NWP) in 2023.

Private passenger auto insurance, including liability and property damage, remains the largest product line, with net written premiums reaching $307 billion in 2023, and written premiums growing more than 14% due to significant price increases.

Fitch Ratings expects continued pricing momentum in 2024 and declining claims trends for personal auto insurance to lead to equal or better results for this year. However, the pace of recovery will vary between insurance companies.

Read more: USI takes a deep dive into the state of the P&C market heading into the middle of the year

The personal auto line has seen significant volatility over the past four years, with record underwriting profits in 2020 due to pandemic-related declines in mileage and claims frequency, followed by a 112% CR segment in 2022. Significant price increases and underwriting actions led to an improved ratio. significantly to reach 105% in 2023.

In the homeowners segment, sharp price increases are expected to fuel improved results in 2024. However, potential volatility from natural catastrophe losses and higher reinsurance costs remains a concern. The sector has reported underwriting losses in six of the past seven years, including a CR of 111% in 2023.

Although there were no significant hurricane-related losses, insured losses from several inland convective storm events and increased loss severity due to higher construction material and contract labor costs negatively impacted the results.

What do you think of this story? Feel free to share your comments below.