Moody’s has changed the outlook for the US property & casualty (P&C) personal insurance sector to stable from negative, reflecting continued improvement in underwriting results.
According to the rating agency, insurers in this sector have “significantly increased pricing” in both personal auto and homeowners to address high auto repair and construction costs, high catastrophe and non-catastrophe weather losses, and elevated reinsurance costs.
In particular, US personal auto insurers have reportedly responded to said high loss cost trends by “aggressively” raising rates and taking other underwriting actions to improve profitability.
“Companies are seeking auto rate increases of about 11% in 2024, which is down from 14% for 2023 but still elevated compared to a pre-pandemic average of around 4.5%,” Moody’s explained.
Meanwhile, home insurers are anticipated to continue to raise rates in 2024 by about 13.5%, slightly lower than in 2023.
Moody’s observed that home insurers are also tightening terms and conditions and boosting catastrophe budgets for weather-related perils.
“We expect that enhanced underwriting results coupled with higher net investment income will help US personal lines insurers maintain or strengthen their capital levels,” the rating agency said.
Moody’s continued, “Though capital has declined for some personal lines insurers, we expect most companies to maintain or strengthen capital levels through strong earnings. Companies generally have solid balance sheets with manageable gross and net underwriting leverage, high-quality investments, and good liquidity.”