State Farm, Progressive, GEICO – the results are in for Q1 2023

Sector posts record premiums but worsening loss ratios

State Farm, Progressive, GEICO – the results are in for Q1 2023

Motor & Fleet

By Mika Pangilinan

Private auto insurers in the US experienced a record surge in premiums during the first quarter of 2023, new analysis has shown, but this growth was overshadowed by the sector’s worst direct incurred loss ratio for a first quarter in over two decades.

According to S&P Global Market Intelligence, premiums increased by $7.48 billion, reaching $76.30 billion in Q1 2023 compared to $68.83 billion in the same period of the previous year.

One of the factors contributing to the rise in premiums was the concerted effort by insurers to compensate for escalating private auto loss costs through rate increases, the analysis stated.

Despite this, the direct loss ratio for the sector deteriorated from 72.4% to 76.2% during the first quarter.

The combination of unusually active natural catastrophes and ongoing inflation-related challenges in the private auto business led to the highest personal lines direct incurred loss ratio for a first quarter period since at least 2001, according to S&P Global.

Prior to the current year, the highest direct incurred loss ratio for a first quarter between 2001 and 2022 stood at 72.4% in 2022. Private auto direct incurred loss ratio had only exceeded 76.2% during the second, third, and fourth quarters of 2022 out of the 88 quarters with available data.

How did the major players fare?

State Farm achieved a 22.2% growth in premiums, marking the second-largest year-over-year increase in private auto direct premiums written among the top 10 auto insurers in the US. However, it also posted the highest faced loss ratio at 87.9%

Meanwhile, Progressive experienced the largest year-over-year increase in direct premiums among the top 10, with a growth rate of 25.2%.

Allstate, USAA, and American Family Insurance also witnessed double-digit increases in private auto direct premiums written, with growth rates of 10.2%, 15.6%, and 12.6% respectively.

On the other hand, GEICO and Liberty Mutual observed declines of 1.9% and 5.7% in private auto direct premiums written.

GEICO was also the only insurer among the top 10 to observe an improvement in the loss ratio year over year, having reported a decrease of $552 million in loss expenses for Q1 2023 compared to the same period in 2022.

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