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According to the U.S. Property & Casualty Insurance Market Report by S&P Global Market Intelligence, auto losses soared by 13 percent in 2016 due to unfavorable claims experience for the underwriters, leading carriers to broadly pursue rate increases. Those rate increases are expected to lead to higher premiums for consumers in the near term but will also lead to gradual improvement in the profitability of the business.
“Though underwriting results in many business lines will deteriorate in 2017, we expect the P&C industry to produce only a modest underwriting loss for the year,” said Tim Zawacki, senior insurance research analyst, S&P Global Market Intelligence. “Needed rate increases for the personal and commercial auto businesses will begin to positively impact industry results in 2017. We expect additional improvement in those lines to take place over the next several years.”
Technological innovations may result in sweeping changes for the industry and consumers over the long term. But in the meantime, as a result of more time spent on the road by U.S motorists, and historically high loss ratios experienced by the industry in 2016, insurers have been filing for rate increases and consumers should expect to pay higher auto insurance premiums, according to the report.
S&P’s report offers additional findings: