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For immediate release
Milliman: Jeremy Engdahl-Johnson,��jeremy.engdahl-johnson@milliman
Triple-I: Loretta Worters,��lorettaw@iii.org

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NEW YORK, May 18, 2021—Property/casualty insurers are projected to continue to post slight underwriting profits in 2021, according to a forecast released today by the����(Triple-I) and��.

The forecast projects a 2021 combined ratio of 99, virtually the same as last year. The forecast was revealed during an��exclusive,����virtual webinar,��“Triple-I /Milliman Underwriting Projections: A Look Ahead,”��moderated by��Triple-I CEO Sean Kevelighan. Early projections for 2022 and 2023 look similar. The combined ratio is the percentage of each premium dollar an insurer spends on claims and expenses.

Premiums are expected to surge 7.1 percent this year, according to the forecast, up from 2.5 percent in 2020, as the combination of an economic recovery and a hard market increase both exposures and rates. A hard market, also known as a seller’s market, occurs when insurance is expensive and in short supply. Premium growth is projected to slow in 2022 and 2023 but remain above 5 percent in both years.

2021 got off to a bumpy start for natural catastrophes. “The industry took a big hit with the Texas freeze in Q1, with overall cat loss estimates in the $15 billion range,” said James Lynch, FCAS, MAAA, senior vice president and chief actuary at the Triple-I. “Most of that was the Texas storm. Q1 losses that big are atypical.” He added that the drought in the West is a continued concern as wildfire season approaches.

Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman, an independent risk management, benefits, and technology firm, said that��underwriting results would gradually improve starting next year. And as more people are vaccinated and back to work, the economy should keep humming. “Last year’s recession was unusual in that there really wasn’t anything wrong with the economy until COVID hit. So now, with COVID (hopefully) on the run, the American Rescue Plan well underway, and the possibility of another stimulus at some point later this year, growth should be strong.”

“We anticipate a jump in premium growth this year, thanks to the economic recovery and a hard market,” said Kurtz.

,��research scientist in the Department of Atmospheric Science at Colorado State University and a Triple-I non-resident scholar, has already given his initial forecast for the 2021 Atlantic hurricane season. He noted��at the time that 2021 is��, with 17 named storms, eight of which will become hurricanes – and of those eight, four are predicted to become major hurricanes (Category 3, 4, or 5, with winds of at least 111 miles per hour). That compares with the����of 14 named storms, seven hurricanes and three major hurricanes.

“There are a couple of reasons why we’re forecasting above-normal Atlantic hurricane activity,” said Dr. Klotzbach. “We do not anticipate El��Niño��conditions this summer and fall,” he said, explaining that��El��Niño��occurs when there is warmer than normal waters in the central and eastern tropical Pacific.

“When those El Niño conditions occur, it tends to increase upper-level winds, so winds at 20,000-30,000 feet in the atmosphere tear apart hurricanes in the Caribbean and into the tropical Atlantic.��We’ll have a lot more to say when we put out our 2021 hurricane projections on June 3,” Klotzbach stated.

Looking at the Directors & Officers (D&O) market, Dave Moore, FCAS, MAAA, of Moore Actuarial Consulting, LLC, said that security class actions continue to exert upward pressure on both the number and size of claims in the public company D&O market and are expected to continue. “Prior to 2017, there were less than 200 security class actions filed per year, on average. In the last four years, that annual average has doubled to around 400 security class actions. Last year frequency fell, which might have been due to the pandemic. Even so, 2020 activity is still well above average.”

Donna��Glenn, FCAS, MAAA, chief actuary, National Council on Compensation Insurance (NCCI),��provided a high-level overview of the latest workers compensation insurance industry results and critical data points that demonstrate the health and resiliency of the system.

“The pandemic has demonstrated that the U.S. workers compensation system is resilient and strong,” she said. “Despite experiencing a 10 percent drop in net written premium amidst the pandemic recession, NCCI reports a calendar year combined ratio of 87, indicating a sign of profitability for carriers. Workers compensation reserves remain robust, with the redundancy growing to $14 billion in 2020.”

Dr. Sam Madden, co-founder and chief scientist from Cambridge Mobile Telematics, a telematics and analytics provider for insurers, rideshares, and fleets, discussed��exposure and risk trends in mobility from the onset of the COVID-19 pandemic. He noted that in early March 2020 there was a precipitous drop in driving – nearly 60 percent – as the pandemic hit and the country shut down.

“During the summer of 2020, people began driving more, but overall, miles [driven] still remained depressed. As restrictions loosened and more people became vaccinated, driving returned to near pre-pandemic levels,” he said.

However, while the number of miles driven dropped during the pandemic, speeding spiked 45 percent. “Reduced traffic meant that many drivers could speed, and they did!” Dr. Madden continued. “Speeding remained elevated throughout the pandemic, and remains somewhat elevated today, with levels about 10 percent higher on average than pre-pandemic.”

Dr. Michel��Léonard, CBE, vice president and senior economist, Triple-I,��noted that the most important issue right now in terms of economics and insurance is the wide range of Gross Domestic Product (GDP) and inflation forecasts. “We’ve never seen GDP forecasts from the Fed and financial institutions ranging from 4 percent to as much as 10 percent. What we can be sure is that the economy has been recovering in Q1 and so far in Q2, but such discrepancies in major economic indicators should be cause for caution, especially as COVID-19 is still an issue here in the U.S. and abroad,” he said. ��

Amid such wider economic uncertainty, Dr. Léonard said, what may be more helpful for insurance practitioners “is to focus on ������ý sector’s own growth, which outperformed the wider economy by nearly 6 percent in 2020 and is well positioned to do so again in 2021. Another insight is the growing consensus around the upward direction of interest rates which should help lift up net income from last year’s minus 3.8 percent.”

About Milliman
Milliman is among the world's largest providers of actuarial and related products and services. The firm has consulting practices in healthcare, property/casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information, visit��.��

About Insurance Information Institute (Triple-I)
Founded in 1960, the Triple-I provides objective, fact-based information about insurance while also being a trusted source of unique, data-driven insights which inform and empower consumers. We want people to have the information they need to make educated decisions, manage risk, and appreciate the essential value of insurance. We have more than 60 insurance company members, including seven of the 10 largest writers of property/casualty insurance overall in the United States. Our focus is to create and to disseminate information; we neither lobby on behalf of ������ý industry nor do we sell insurance.��

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