Claims cost inflation and increased driving activity took their toll as the U.S. private auto insurance industry‘s combined ratio topped the 100% benchmark for the first times since 2017.
The combined ratio for the industry, excluding policyholder dividends, deteriorated to 100.8% in 2021 from 98.2% in 2019, the last full year before the COVID-19 pandemic, analysis shows. S&P Global Market Intelligence annual statutory filings. The combined ratio of 90.5% in 2020 was heavily impacted by the pandemic, which prompted the issuance of stay-at-home orders across the country and resulted in a pronounced decline in driving activity.
Industry-wide, direct premiums written by private auto insurers increased 4.6% year-over-year to $261.58 billion in 2021 from $250.14 billion in 2020 Net premiums written across the industry rose 3.8% year-over-year to $252.86 billion, from $243.65 billion in 2020.
The industry loss ratio deteriorated to 67.6% from 55.9% a year ago. Before the pandemic, the combined ratio of the private auto industry was 64.6% in 2019.
Kemper’s combined ratio soars
At the company level, nine of the top 20 insurers posted combined ratios above 100% in 2021. Kemper Corp. had the highest combined ratio among the insurers included in this analysis at 117.6%, followed by State Farm Mutual Automobile Insurance Co. at 107.5%. Hanover Insurance Group Inc. had the lowest combined ratio at 92.0%.
Market share rankings virtually unchanged
There was little change in market share rankings among the top 20 private auto insurers in 2021. Most companies saw higher direct premiums year over year. State Farm retained its top spot, reporting direct written premiums of $41.67 billion for the year
GEICO Corp. and The Progressive Corp. of Berkshire Hathaway Inc. retained their respective No. 2 and No. 3 spots with written premiums of $37.42 billion and $35.85 billion, respectively.
The Auto Club Insurance Association and Mapfre SA saw the largest declines in two-year annualized direct premiums written among the top 20 private auto insurers, at 7.7% and 7.3%, respectively. Two-year annualized direct premiums fell 5.6% for Nationwide Mutual Insurance Co., 4.1% for The Hartford Financial Services Group Inc. and 3.2% for Mercury Insurance Co.
Progressive’s two-year annualized direct premiums climbed 7.5% to $35.85 billion in 2021. State Farm and GEICO also saw growth, with direct written premiums up 0.5% and 3 .3%, respectively, over this period.