Current State of the Property Casualty Insurance Market
Summary
Slide presentation titled Current State of the Property Casualty Insurance Market, prepared for the Washington Senate Business, Financial Services, Gaming & Trade Committee by Karen Collins, Vice President, Property & Environmental, dated November 30, 2023. The slides cover growing insured natural catastrophe losses, a table of the global costliest insured wildland fires (the 2018 Camp fire in California first at $11.8 B and the 2017 Tubbs fire second at $10.5 B), and Verisk's listed factors behind a doubling of average annual natural catastrophe losses over the last decade. The slides also cover homeowners cost inflation, elevated combined ratios in U.S. property lines, and mitigation, with a reference to 148 recommendations from a commission of 50 members. A final slide lists APCIA research and white papers.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
- Issuer
- Congressional materials
- Document type
- 2023 11 30 A31494 D262999 Apcia Current State Of The Property Casualty Insurance Marke
- Date
- 2023-11-30
- Case
- 2023 11 30 A31494 D262999 Apcia Current State Of The Property Casualty Insurance Marke
Cite this document
“Current State of the Property Casualty Insurance Market.”
Original at app.leg.wa.gov, dated 2023-11-30. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2023-11-30-2023-11-30-a31494-d262999-apcia-current-state-of-the-property-casualty-insurance-marke/
, SHA-256 f48d8a1ee205643fc232a75c2769f3453969f67e6060741ec2fb4f4bded7e1ae.Full text
Current State of the Property Casualty Insurance Market
Washington Senate Business, Financial Services, Gaming & Trade Committee
Karen Collins
Vice President, Property & Environmental
November 30, 2023
1
Growing Losses
Insured natural catastrophe losses (USD bn)
2
Increasing Losses from Secondary Perils: Wildfires
Global insured losses from wildfires
In USD billion, at 2020 prices
3
Global Costliest Insured Wildland Fires
Utility-involved ignitions since 2017
CALIFORNIA, COLORADO, & OREGON
2020
Labor Day
Rank Insured Losses Event Location
1 $11.8 B 2018 Camp California
18,800 structures
2017
2 $10.5 B 2017 Tubbs California
Tubbs 2018 5,600 structures
Camp
3 $5.0 B 2018 Woolsey California
2017 2021 1,600 structures
Atlas Marshall 5 $3.6 B 2017 Atlas California
2017 700 structures
Thomas 9 $2.7 B 2017 Thomas California
1,000 structures
2018
Woolsey 10 $2.7 B 2021 Marshall Colorado
1,000 structures
(Above losses adjusted to 2022 dollars)
2023 TBD $3-4 B 2023 Maui Maui
Maui estimate 2,200 structures
-- $1-2 B 2020 Labor Day Oregon
estimate 4,000 structures
4
What is Causing the Increased Losses
Seeing the full picture… it’s not just the weather
Verisk:
Verisk: TheThe factorscausing
factors causing aadoubling
doublingof average annual
of average natural
annual natural
catastrophelosses
catastrophe lossesover
over the
thelast
lastdecade
decadeareare
(in order of importance):
(in order of importance):
1. A rise in exposure values and replacement costs, represented both by
continued construction in high-hazard areas and by high levels of inflation
that are driving up repair and rebuild costs
2. The natural variability that comes from selecting any five-year sample of
natural catastrophe experience
3. The effects of climate change on different atmospheric perils
4. The impacts of man-made loss drivers, such as social inflation and legal and
regulatory factors
5
Increasing Homeowners Cost Inflation
6
Elevated combined ratios in U.S. property lines
i.e. - for every dollar in premium collected, more than a dollar paid
Homeowners Commercial multi-peril
Source: APCIA using S&P Global (*S&P Year-End Projection, data compiled October 20, 2023)
Commercial multi-peril results include liability and non-liability lines of coverage.
7
The Real Underlying “Insurability” Friction
Property insurance demand and costs are increasing; capital is decreasing
DEMAND vs SUPPLY CAPITAL PRESSURES:
• Property insurance cost inputs • Exposures are escalating
increasing (much faster than CPI and premiums)
• Rate suppression/delays • Net underwriting losses
(1–2 year lag time for rate filings, approvals, • Unrealized investment losses
and rolling into new policies) • Lower reserve releases
• Lack of profitability + volatility
= Premiums don’t keep up w losses = Contraction of current capital
(i.e., ‘net underwriting losses’) = Deters new investment capital
(must pay higher cost for capital)
8
Bringing the Loss Curve
Down Through Mitigation
9
Reduce Exposure and Future Losses
148 Recommendations
Unanimous consensus from nonpartisan commission.
Commission comprised of 50 members representing
diverse geographies and backgrounds.
https://www.usda.gov/topics/disaster-resource-center/wildland-fire/commission
10
Thank You!
Karen Collins
Vice President
Property & Environmental
Karen.Collins@APCI.org
11
APCIA Research and Thought Leadership
Examines factors beyond weather that are Highlights the top inflation trends, natural disaster A 3-part white paper series that identifies the Highlights the top inflation trends, riskier driving
increasing losses and resulting in market losses and financial impacts resulting in significant challenges and opportunities affecting consumers behavior, and financial impacts resulting in
instability, with emphasis on 3 states experiencing pressure on property insurance markets that are and property insurance markets specifically in significant pressure on auto insurance markets
the most market instability. impacting insurers, reinsurers and consumers. wildfire-exposed states. that are impacting insurers and consumers.
Press release: Press release: Press release: Press release:
https://www.apci.org/media/news- https://www.apci.org/media/news- https://www.apci.org/media/news- https://www.apci.org/media/news-
releases/release/72898/ releases/release/75202/ releases/release/73621/ releases/release/76883/
12
File and source
- File
- 2023-11-30_a31494_d262999_apcia-current-state-of-the-property-casualty-insurance-marke.pdf
- Size
- 3,183,699 bytes
- SHA-256
- f48d8a1ee205643fc232a75c2769f3453969f67e6060741ec2fb4f4bded7e1ae
- Original
- app.leg.wa.gov