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Property & Casualty Insurers Finish 2020 Marked By Global Pandemic and Unprecedented Catastrophic Events

Insurers Experience Drop in Net Income, Slowdown in Premium Growth, and Lowest Annual Investment Yield Since at Least 1960, According to Verisk and APCIA

JERSEY CITY, N.J., May 24, 2021 — Property/casualty insurers weathered a turbulent year in 2020, buffeted by a global pandemic that deeply disrupted economic activity and a historic catastrophe season that caused nearly $62 billion in insured losses, according to a report from Verisk (Nasdaq:VRSK), a leading global data analytics provider, and the American Property Casualty Insurance Association (APCIA).

Private U.S. property/casualty insurers’ net income after taxes fell 2.9% to $60.1 billion in 2020 from $61.9 billion in 2019. Insurers’ rate of return on average policyholders’ surplus, a measure of overall profitability, declined to 6.8% from 7.8% in 2019. Insurers provided roughly $11.5 billion in premium relief to policyholders despite reporting a 5.6% decline in net investment income caused by the lowest investment yield since at least 1960.

Insurers’ combined ratio, which measures underwriting performance, did improve somewhat to 98.7% in 2020 from 98.9% in 2019 and insurers’ net underwriting gain increased to $5.1 billion from $3.7 billion in 2019.

“Insurers’ net income and net written premium growth declined in 2020 as the industry was hit by the pandemic and severe natural catastrophe losses,” said Robert Gordon, APCIA senior vice president, policy, research and international. “Investment yields fell to the lowest level since at least 1960. Insurers eked out a $5.1 billion underwriting gain on more than $650 billion of NWP after reserve releases, although that gain may not reflect the potential of significant long-tail losses from COVID-19. The drop in personal lines combined ratio is reflective of the drop in the personal auto combined ratio which is largely due to a temporary reduction in miles driven. While personal auto writers provided various forms of rebate and significant rate reduction, severity of claims continued to climb significantly, and miles driven has been rapidly increasing in 2021.”

“During a challenging year, many insurers accelerated their digital transformations and used new technology, like our OneXperience virtual inspection platform, to continue serving their customers,” said Neil Spector, president of ISO, a Verisk business. “Now, at a moment of great uncertainty—about the continued course of the pandemic, the potential for future climate-driven catastrophes, and the contours of our emerging ‘new normal’—it’s critical for insurers to further enhance their operational efficiencies and sharpen the use of data-driven insights as they reset from 2020.”

Taking the measure of COVID-19 and catastrophes on the industry

The pandemic’s impact was acutely felt in the broader economy and as economic activity slowed, growth in both premiums and losses followed suit. Insurers wrote $650.4 billion in net premiums in 2020, an increase of just 2.6% from $634 billion in 2019, in contrast to the 6.2% growth rate reported for the first quarter of 2020. Net earned premium also grew 2.6% for the year.

The year 2020, marked by 19 catastrophes with at least $1 billion in direct insured losses in the United States (according to Verisk PCS), generated $61.7 billion in net insured losses and loss adjustment expenses (LLAE) from catastrophes, more than double the 2019 amount. However, overall LLAE growth slowed in 2020 to 1.2%, down from 4.3% in 2019, thanks to a $27.9 billion decline in LLAE for losses other than catastrophes.

Many personal lines insurers offered substantial premium relief to auto policyholders in 2020. According to an analysis from ISO, insurers issued roughly $11.5 billion in premium relief to policyholders in 2020 through a combination of dedicated rate reductions at renewals, premium credits, and policyholder dividends. Partly as a result, net written premium growth for insurers writing mostly personal lines slowed to 0.4% in 2020 from 4.5% a year earlier. Personal lines insurers’ combined ratio improved 2.2 percentage points to 95.6%.

Policyholders’ surplus rose to $910.2 billion as of December 31, 2020, from $847.3 billion as of December 31, 2019, driven by growth in the stock market.

Fourth-quarter results

The industry’s consolidated net income after taxes rose to a record $25 billion, up sharply from $13.5 billion in the fourth quarter of 2019. Insurers’ net income growth was driven, in part, by a $6.5 billion improvement in underwriting results and a $4.5 billion increase in net investment gains.

The industry’s combined ratio for the quarter improved to 98.2% in 2020 vs. 102.1% in 2019, thanks largely to a 3.7 percentage point improvement in the loss ratio. View the full report (pdf) from Verisk and APCIA.

2020 By The Numbers

About Verisk 
Verisk (Nasdaq:VRSK) provides predictive analytics and decision-support solutions to customers in the insurance, energy and specialized markets, and financial services industries. More than 70 percent of the FORTUNE 100 relies on the company’s advanced technologies to manage risks, make better decisions and improve operating efficiency. The company’s analytic solutions address insurance underwriting and claims, fraud, regulatory compliance, natural resources, catastrophes, economic forecasting, geopolitical risks, as well as environmental, social, and governance (ESG) matters. Celebrating its 50th anniversary, the company continues to make the world better, safer and stronger, and fosters an inclusive and diverse culture where all team members feel they belong. With more than 100 offices in nearly 35 countries, Verisk consistently earns certification by Great Place to Work. For more:, LinkedIn, Twitter, Facebook, and YouTube.

Representing nearly 60 percent of the U.S. property casualty insurance industry, the American Property Casualty Insurance Association (APCIA) promotes and protects the viability of a competitive private insurance market for the benefit of consumers and insurers. APCIA represents the broadest cross section of home, auto, and business insurers of any national trade association. APCIA members represent all sizes, structures, and regions, which protect families, communities, and businesses in the U.S. and across the globe. For more information, visit

Media Contacts:

Ali Krueger Herbert for Verisk

Jeffrey Brewer for APCIA

Loretta Worters for I.I.I.

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