Progressive bucks US private auto trend with double-digit premium growth in Q1

First-quarter premium growth weakened year over year for the U.S. private auto insurance industry as 12 of the largest insurers operating in the country saw their direct premiums written decline, according to an S&P Global Market Intelligence analysis.

Total direct premiums earned came in at $65.15 billion, slightly lower than $65.66 billion a year ago. That reduction includes discounts and credits offered by many insurers to auto and motorcycle policyholders after the pandemic began in the spring of 2020. Such rebates generally ranged from 3% to 5% of annual premiums in 2020, impacting company income statements in different line items. Rebates have continued in 2021 but on a much smaller scale and are no longer explicitly reported in companies' statements.

The industry's loss ratio in the first quarter was 58.4%, significantly lower than what was observed before COVID-19 fully took hold in the U.S. From 2018 until the first quarter of 2020, the loss ratio for the industry was 60% or above.

Premium rebates to policyholders due to COVID-19 had an impact on results throughout the industry, which used different methods to account for their givebacks.

In terms of direct premiums written growth, The Progressive Corp. was the outlier as it saw an increase of 14.3% year over year to $9.55 billion, the highest among the top 20 largest auto insurers and the only one that rose by double digits.

The company said in its Form 10-Q that its consumer segment Robinsons continued to experience year-over-year growth in personal auto policies in force that outpaced other consumer segments.

Progressive gave its private auto insurance customers temporary premium rebates to reflect fewer driving miles and accident claims but paid them as a business expense that did not lower premiums received. That expense totaled more than $1.08 billion, according to an S&P Global Market Intelligence analysis. Progressive's true growth rate is also slightly understated by its fiscal year accounting.

State Farm Mutual Automobile Insurance Co. retained the top spot in the ranking despite a year-over-year decrease in direct premiums written. State Farm's direct premiums written were down 2.5% year over year to $10.36 billion.

Berkshire Hathaway Inc.'s GEICO Corp., which saw a 3.2% increase in direct premiums written, held on to second place.

Liberty Mutual Holding Co. Inc., which passed Farmers Insurance Group of Cos. to take the No. 6 spot, saw direct premiums written rise 6.4% to $3.32 billion in the first quarter. Farmers Insurance booked a 1.8% direct premiums written decline year over year during the period, partly due to discounts that it offered to auto and motorcycle customers amid the COVID-19 pandemic.

Of the 20 largest auto insurers in this analysis, Mapfre SA logged the biggest year-over-year decrease in direct premiums written at 9.8%.