The US property and casualty industry net underwriting income dropped by 86% to $600m in the first nine months of 2020 compared with the corresponding period in the previous year as insurers reported COVID-19 related increases in underwriting expenses and dividends to policyholders.
An AM Best report based on nine-month 2020 interim period statutory statements received as of 18 November 2020 and accounting for 97% of total industry net premiums written and 96% paints a bleak picture.
It said that the reduction in insured exposures resulting from stay-at-home orders and government-ordered business closures in response to the pandemic led some proper/casualty insurers to provide premium credits, while refunds and policyholder dividends increased as required under existing policy terms. Voluntary premium refunds may be reported as an underwriting expense if certain conditions are met, according to the report.
The nine-month 2020 combined industry ratio was 98.7%, compared with 98% for the comparable period last year.
AM Best estimates catastrophe losses accounted for 8.3 points of the combined ratio, compared with an estimated 4.4 points for the comparable period in 2019.