ISO Reports Increase in Profits for Property/Casualty Insurers

Property/casualty insurers increased first-quarter profits by about 41 percent between 2012 and 2013, according to new data from the Insurance Services Office (ISO), with first-quarter profits jumping from $10.2 billion in 2012 to $14.4 billion this year.

The increase appears to largely be the result of an increase in premiums and an increase in reserve releases that offset a small rise in loss costs.

In the first quarter of 2013, premiums collected by insurers were up 4.1 percent from last year, which amounted to a $4.6 billion increase.

Meanwhile, loss expenses rose $300 million between the two periods, but that increase was largely offset by a $1.7 billion increase in the amount of funds insurers released from their reserves.

Profits from investments also gave insurers’ bottom line a $400 million boost.

As the headline from the ISO press release states, this is the first time in a matter of years that underwriting has turned profitable for p/c insurers. According to the ISO, this is the first time insurers saw gains from underwriting since the fourth quarter of 2009.

Underwriting is the process of assessing policyholders’ likelihood of filing a claim and then calculating accordingly how much they should pay for coverage. Through good underwriting, insurers ideally end up collecting enough premiums to cover the combined cost of losses, policyholder dividends and other underwriting expenses.

In the first quarter of 2012, the p/c industry saw a loss of $144 million on underwriting, meaning losses were higher than they had anticipated.

But in the first quarter of 2013, the industry turned it around and saw an underwriting gain of $4.6 billion.

According to the ISO, insurers have seen underwriting gains only about 16 percent of the time since 1986.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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