According to a report on the results of global firms, insurer and reinsurer combined operating ratios improved in the first half, as rate increases outweighed claims. Double-digit rate increases were reported by six of the 18 tracked. QBE led with a 26% increase due to rising commodity prices in its North American crop business.
Pricing in commercial lines increased premiums, whilst rate growth for reinsurance also supported the momentum. Favourable pricing is expected to continue this year according to Willis Re. Some management teams have mentioned that further rate increases are likely to be less significant and portfolios have started to ease.
The increased profitability was supported by lower than expected personal lines loss frequency and some reserve releases were achieved despite higher natural catastrophe losses. The average combined ratio for the half was 93.7% with every company below 100%. Experiencing higher profit performance compared to the same period the previous year, which included substantial COVID losses.
Willis Re discussed the long term outlook of rating the environment and the current cyclical upswing as well as if profit margins are set to continually increase. Inflation impacts many areas in the short term as well as longer-term. Potentially including loss ratio deterioration, due to lags in pricing response, loss development increases above-booked levels and reductions in the market shares according to the report.
The report states that “In the current pricing cycle, companies appear to be proactively taking pricing action, but it remains to be seen whether it is sufficient”.
There are a number of companies included in the report such as QBE, Chubb, AIG, Aviva, Liberty Mutual, MS&AD, Allianz, Axa, Zurich, Travelers, Mapfre, Hannover Re, Swiss Re, Munich Re, Generali, Sompo. Tokio Marine and Scor.
Insurance News – https://www.insurancenews.com.au/international