Insurer’s profits slump 36% as losses bite

Insurer’s profits slump 36% as losses bite | Insurance Business America

Insurer’s profits slump 36% as losses bite
Distracted drivers are driving Nationwide profits on a downhill path.

According to the insurer, its 2016 operating profit dipped to $910 million, its lowest since 2012. Its profit figure from last year also represented a 35% drop from 2015 margins, which reached $1.23 billion.

More accidents, higher repair and medical costs were deemed to be the chief culprits.

“The distracted driving is a big piece. It’s hard to get your arms around it,” Nationwide chief financial officer Mark Thresher told the Columbus Dispatch.

Want the latest insurance industry news first? Sign up for our completely free newsletter service now.

He went on to say, “We’re trying to educate people. We’re trying to work hard on safe-driving practices and how to help people on how to use their cellphone and not use their cellphone in the car.”

The Nationwide executive added that the firm is studying options to strengthen its business lines as it raises rates to cope with the rising costs from its auto insurance specialty.

Overall operating revenue rose by almost 4% to $27 billion last year, the Dispatch also reported.

“We’re able to produce that level of earnings because (of) our other businesses,” Thresher explained.

Nationwide paid $17 billion in claims and other benefits to policyholders. It expects business to pick up as losses from catastrophes toed the line in prior years, and a more amiable interest rate environment is expected to benefit the industry this year.

Related stories:
America’s worst drivers are in Boston, says Allstate report
Liberty Mutual profits hit by auto