Increases which escape from deathwhich can lead to higher rates and reduce homeowner protection, S&P Global Ratings examines the challenges facing property/casualty insurers in the US.
In its recent report, S&P highlights new data showing that insurance losses from natural disasters in the United States have risen. more than 40 billion dollars per year on average over the past seven years, compared to $22 billion per year in the 2010-2015 period.
This increase is largely due to the increased frequency of wind, wildfires and hurricanes. As a result, insurers have increased rates and changed their underwriting practices to reduce exposure to these common loss events, potentially increasing costs and reducing coverage for homeowners. Extreme climate change remains a very high risk and is not expected to change.
In the last 18 months, insurers have reduced the coverage of low protection against natural disasters. As a result, the main insurers keep a large risk and pay for insurance, especially in personal lines, which are exposed to more material risks.
This decline leads to a negative outlook for the P/C insurance sector, with a reduction in balance sheets and a deterioration in underwriting and personal lines (both auto and home).
Despite these challenges, P/C insurers can adjust their plans as many property policies renew each year. Although regionalization and product concentration may reduce this volatility, the sector is expected to maintain a high credit rating, with an average rating of “A+.”
Insurers may pay higher premiums for home insurance and reduce coverage in areas prone to natural disasters, especially where regulatory restrictions prevent rate increases. As a result, home owners will be exposed to greater risk and pay for less protection.