With 2020’s hurricane season likely to see 190% more storms than the average season, the Zacks Property and Casualty Insurance (P&C) industry is up for a tough ride. Nonetheless, better pricing, prudent underwriting and exposure growth should benefit Berkshire Hathaway (BRK.B), Progressive Corporation (PGR), Allstate Corporation (ALL), Everest Re Group (RE), Fidelity National Financial (FNF) and First American Financial (FAF).
While frequent natural disasters should accelerate the policy renewal rate, increasing adoption of technology and emergence of insurtech will help in smooth functioning of the industry. However, pandemic-related uncertainties weigh on merger and acquisition (M&A) activities and industry surplus.
About the Industry
The Zacks Property and Casualty Insurance industry comprises companies that provide commercial and personal property, and casualty insurance products and services. Such insurance coverage helps to safeguard property in case of any natural or man-made disaster. Liability coverages are also provided by some industry players.
Insurance coverages offered by the companies also include automobiles, professional risk, marine, excess casualty, aviation, personal accident, commercial multi-peril, and professional indemnity and surety.
Premiums are the primary source of revenues for these insurers. These companies invest a portion of premiums collected to meet their commitments to policyholders. Thus, a low rate environment is a concern for P&C insurers (especially for long-tail insurance providers).
4 Trends Shaping the Future of Property and Casualty Insurance Industry
Catastrophe loss weighing on underwriting profitability: The property and casualty insurance industry is susceptible to catastrophe events, which drag down underwriting profit. Per reports by Aon, total economic losses in the first half of 2020 was $75 billion, stemming from 207 catastrophe events across the globe while insured losses were $30 billion, 8% higher than the 20-year average. In fact, Colorado State University (“CSU”) expects ‘extremely active Atlantic hurricane season in 2020 and hurricane activity will be