Kroll Bond Rating Agency on Dec. 20 released its 2017 outlook report on the U.S. property and casualty insurance sector, with underwriting profitability for the full year of 2016 expected to be at breakeven.
The rating agency expects the P&C industry to post a combined ratio of about 100 for the 2016 full year. Challenges for the industry in 2016 and heading into 2017 include the highest level of insured catastrophe losses since 2012, led by Hurricanes Hermine and Matthew.
In addition, the industry faces unfavorable loss trends in personal and commercial auto lines, where rate increases have been challenged to keep up with losses, according to Kroll. For pricing in lines other than auto, the rating agency anticipates the continuation of decreased rates, but to a lesser extent than in recent years. Commercial lines, reinsurance and catastrophe reinsurance are all expected to see low-single-digit rate decreases.
Also dragging on results, year-over-year reserve releases have been decreasing across most lines, with the exception of personal and commercial auto liability. Additionally, the rating agency said there is a potential need for significant increases in asbestos and environmental reserves, predominantly due to asbestos.