Insurance Companies Cash In While Covering Record-Breaking Destruction
While Mother Nature unleashed record-breaking chaos, US insurers unleashed their profits. Global natural disaster losses surged ~33% to $320B last year, but property and casualty insurers counterintuitively nearly doubled earnings — leveraging an “aggressive” tactic, as the sector’s 9.75% YTD windfall eclipses the S&P 500’s measly 1.15% bump.
- After five years of losses on premiums (inflows) vs. claims (outflows), insurers had the most lucrative year since 2013, per S&P Global — surging after-tax profits to $171B from $92B.
- The industry had “an aggressive push for significant rate and pricing increases,” noted an AM Best analyst — with a Minnesota homeowner’s annual policy swelling to $3.8K from $1.96K.
The pricing party: While insurers celebrated record profits, they’re not ready to stop the rate-raising revelry. Allstate’s CEO signaled further increases for New York and New Jersey, while tariffs on car parts and building materials could justify even steeper hikes. Despite historically cutting prices after profitable periods, major insurers assured shareholders they wouldn’t enter aggressive price-cutting cycles. With Progressive hiking premiums by 18% and Travelers pushing business rates up 10.5%, the only thing falling faster than trees in a hurricane is consumer affordability.
