The Property/Casualty Market Projected to be Stable in 2020

The global property/casualty insurance market remains stable for 2020 as economic growth, good capitalization and increased prices help keep insurers afloat. Although, rising claim costs and low investment hiccups will continue as headwinds for insurers regarding the property/casualty insurance outlook.

The Ins and Outs of the P&C Market Worldwide

North America holds 40% share of the global property/casualty market and has the most robust outlook, with the 12- to 18-month property/casualty pricing trend forecast up by low to mid-single digits, with larger increases in catastrophe-exposed properties and commercial auto.

Europe, the Middle East and Africa hold a 31% market share, with the region forecast to rise by low single digits, while the Asia-Pacific region, with a 25% market share, is expected to rise by low single digits through the coming year and a half.

Latin America, which holds a 4% share of the global property/casualty market, is expected to increase by low single digits. In the U.S., the largest price increases are in commercial auto, general liability and professional liability. Loss cost inflation, however, is an obstacle for margins in commercial casualty sector.

Slight deterioration in underwriting margins in 2020 along with weaker reserve levels, including reserve deficiencies in general liability is expected among commercial auto and professional liability.

In Europe, the single-digit price increases will remain consistent with claims costs, while competitive pressures will prevent the larger increases needed to counteract falling investment income.
China is the world’s fastest-growing property/casualty market as insurers expand into nonmotor lines such as health, agricultural and liability, which will test the strength of the sector’s underwriting.

More on the Outlook

By country, the outlook for most nations was stable except for France, where low interest rates heighten reserve requirements for long-tail business and will pressure investment income; and the Netherlands, where recent insurance sector consolidation could intensify price competition, and high P&C combined ratios leave the sector more reliant on investment income (which is under pressure).

In addition to low interest rates and rising claims costs, climate change and technology will prove to be disruptive within the insurance industry but may also bring new opportunity. P&C insurers are exposed to the economic consequences of climate change, mainly due to the unpredictable effects on the frequency and severity of weather-related catastrophes such as hurricanes, floods, convective storms, droughts and wildfires. Such shifting perils also represent an opportunity for these insurers to provide additional coverages and other risk management products for clients.