The P&C Insurance Industry may hit its stride in 2021. The coronavirus pandemic continues to pose a threat to stability, but early signs show positive trends for a steady year in a hard market.
WaterStreet Company is here to help inform insurers of trends to expect in 2021. We are a provider of P&C Policy Administration Software, supporting insurers through policy and claims administration, document management, third-party connections and more.
The State of the P&C Insurance Industry
In the first half of 2020, the United States P&C Insurance Industry recorded a net profit of $27 billion, a 23% decline from 2019. Deloitte has estimated the global market may see 3% growth in 2021, in part due to emerging markets.
The COVID-19 pandemic continues to plague many countries around the world with over 400,000 deaths in the United States and rollout of the vaccine on pause in some areas. The virus has posed many problems to the insurance industry and global economy, however shows signs of an economic rebound heading into 2021. According to the US Congressional Budget Office, real GDP growth is estimated to grow by 4.2% on a fourth-quarter-to-fourth-quarter basis.
- The US P&C Insurance Industry experienced a 23% decline in profits mid-year compared YoY
- Deloitte estimates 3% global P&C Insurance Industry growth in 2021
- The US Congressional Budget Office estimates real GDP to grow by 4.2%
- The COVID-19 pandemic remains to be a risky factor
What to Expect in 2021
As the virus’s containment continues, led by global health leaders and community guidelines, insurers have turned towards improving underwriting. According to the National Association of Insurance Commissioners, P&C insurance underwriting experienced an $8.9 billion gain in the mid-year 2020 period, 37.7% higher than the same period in the previous year.
In the case of auto insurance, fewer cars on the road has resulted in fewer accidents, allowing auto insurers to realize improved profits. Homeowners have faced heightened catastrophes due to global climate change and unexpected patterns, showing insurers opportunities to improve underwriting with properties. Rating by peril, offering the policyholder a fixed rate based on the perils covered by the policy, has grown in popularity along with Usage-based Insurance for offering policyholders discounts.
Insurers have begun to pay close attention to named perils, including derechos, wildfires and lightning. Next generation underwriting practices can take advantage of geolocation data for better predicting properties at risk. Many homes are currently uninsurable due to ZIP code, which is historically inaccurate for measuring risk for a single property.
Hurricane season officially begins June 1st, 2021. Weather.com indicates that while it’s too early to make an accurate prediction, there is a 25% chance of having an extremely active hurricane season again.
WaterStreet Company in 2021
This year, we’re aiming to deliver the most flexible and easy to operate cloud P&C insurance software to date, capable of connecting to any third-party solution and hosted with cloud storage for access anywhere at any time. Many incumbent insurers are held back by dated legacy systems and can aim for better technology to support underwriting decisions.
We understand the importance for carriers and MGAs to adapt to market changes. Ask us about our additional services for accounting, policy, distribution and customer service support.
Reach out to WaterStreet Company today to request a consultation and demo.