Fitch Ratings predicts the continue of strong growth in the commercial lines sector
Fitch Ratings, a global ratings agency, has released an update for its commercial lines insurance market report. The report highlights a growing trend of profitability and expansion for the commercial lines sector. The commercial lines sector is currently rates as “Stable” by Fitch, which predicts that the sector will continue to see strong progress in the coming months. The agency’s outlook on the sector is supported by growing profitability that insurers have reported over the past several quarters.
Solid premiums growth has helped create a safety net for insurers against natural disasters
Commercial lines insurance has experienced solid premiums growth for the past three years. Fitch suggests that this growth is being powered by hardening market conditions that have existed within the sector for the past 10 quarters. The report from Fitch notes that growing profitability among insurers has created a sort of financial safety net, allowing them to withstand future difficulties that may emerge in the market.
Medical professional liability was the only aspect of the commercial lines sector to see negative results
Net written premiums increased by 3.6% in 2013, according to Fitch. While this growth is lower than what was reported in 2012, the commercial lines sector has seen improvements to their accident year loss ratio in 2013. Insured losses relating to natural disasters were relatively modest in 2013, which created a favorable environment for the commercial lines sector. Many insurers were able to avoid any significant underwriting losses as well when it came to workers’ compensation. Medical professional liability is the only aspect of the commercial lines sector that experienced negative results.
Commercial lines sector expected to see a positive 2014
Recent price increases have come as a result of underwriting losses in the past. Fitch’s report suggests that underwriting profits are currently the only viable way to recover from failed investment income during the currently hardening phase of the commercial lines market. Overall, the commercial lines sector is expected to continue seeing favorable growth in the coming year, but unforeseeable disasters could have a modest impact on the sector.