Best's Market Segment Report: AM Best Maintains Stable Outlook on U.S. Commercial Lines Insurance Segment
AM Best is maintaining its stable market segment outlook on the U.S. commercial lines insurance for 2024, citing in part the segment's persistently strong underwriting results throughout the pandemic and amid substantial economic and capital markets volatility.
Admitted commercial lines carriers in aggregate remain disciplined about risk selection, terms and conditions, and capacity deployment, according to the new Best's Market Segment Report, "Market Segment Outlook: U.S. Commercial Lines." The report notes further evidence in the form of continued strong submission flow and growth in the non-admitted/excess and surplus lines (E&S) market. Sharply higher fixed-income re-investment rates have begun to significantly bolster operating profitability in virtually all commercial lines, especially longer-tailed casualty.
"Pricing momentum remains positive for most classes of business, with the notable exception of workers' compensation and certain management liability classes," said Alan Murray, associate director, AM Best.
According to the report, reserve development from prior period exposures is expected to be favorable overall for commercial lines, although at lower levels than in the past few years. However, expected reserve development from prior period exposures will vary widely by line of business.
AM Best is citing several near-term concerns that could affect the U.S. commercial lines segment. Chief among them is that economic inflation remains stubbornly elevated, despite central bank actions to moderate. Also, social inflation, including jury awards and litigation costs, continue to rise, affecting loss costs in the casualty lines of business. Domestic and geopolitical risks, including congressional gridlock, are noted as factors that have the potential to sharply heighten commercial and economic risks relevant to the U.S. property/casualty commercial lines segment.
The stable outlook on the U.S. commercial lines segment reflects AM Best's expectation that the segment will remain profitable in aggregate and will be resilient in the face of near- and longer-term challenges. It also reflects that the risk-adjusted capital for the majority of segment carriers will remain sound. In addition, the outlook reflects the stable outlooks on the commercial property and workers' compensation lines, as well as the positive outlook for the excess & surplus lines market.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=338279.
To view a video with AM Best Associate Director Alan Murray about the U.S. commercial lines market segment outlook, please visit http://www.ambest.com/v.asp?v=outlookcommerciallines1223&AltSrc=182.
Leading AM Best analysts will review 2023 market segment outlooks for the U.S. insurance industry's major segments, the global reinsurance industry and the delegated underwriting authority enterprises (DUAE) segment in an online briefing scheduled for Tuesday, Dec. 12, 2023, at 2 p.m. (EST). To register for the complimentary briefing, please go to http://www.ambest.com/conference/USMB2024.
To view current Best's Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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