AM Best has maintained its stable market segment outlook for the US commercial lines insurance in 2024, partly based on the sector's consistently strong underwriting results during the pandemic and amid significant economic and capital market fluctuations.
According to the latest Best’s Market Segment Report, titled “Market Segment Outlook: US Commercial Lines,” admitted commercial lines carriers have demonstrated a disciplined approach in risk selection, terms and conditions, and capacity deployment.
The report highlights the sustained strong submission flow and growth in the non-admitted/excess and surplus lines (E&S) market. It also points out that higher fixed-income reinvestment rates are starting to significantly improve operating profitability across various commercial lines, notably in longer-tailed casualty segments.
Alan Murray, associate director at AM Best, noted that pricing momentum remains positive for most business classes, except for workers’ compensation and some management liability classes.
The report anticipates generally favorable reserve development from previous period exposures in commercial lines, although at reduced levels compared to recent years. However, it also mentions that expected reserve developments will vary widely by line of business.
AM Best identifies several near-term concerns for the US commercial lines segment. Persistent economic inflation, despite central bank efforts to control it, tops the list. Additionally, social inflation factors such as increasing jury awards and litigation costs are impacting casualty lines.
Domestic and geopolitical risks, including potential congressional gridlock, are also seen as threats that could significantly affect commercial and economic risks relevant to the US property/casualty commercial lines segment.
The stable outlook for the US commercial lines segment reflects AM Best’s anticipation that the sector will continue to be profitable and resilient against near- and longer-term challenges. This outlook also considers the sound risk-adjusted capital for the majority of carriers in this segment. Furthermore, it takes into account the stable outlooks on the commercial property and workers’ compensation lines, as well as the positive outlook for the excess and surplus lines market.
What are your thoughts on this story? Please feel free to share your comments below.