US property & casualty outlook: economic reopening leads to diverging claims trends

We see a bifurcating trend in US P&C profitability in 2021, as commercial insurance benefits from stronger underwriting results but personal lines face claims headwinds. Higher natural catastrophe and pandemic-related losses should sustain the hard market in commercial insurance, but the current surge in home construction prices will likely increase severity of claims in property lines. 

Key takeaways:

  • We forecast US P&C ROE to moderate to about 6% in 2021 from 6.8% last year.
  • The sector's profitability gap is estimated at 4% in 2020. 
  • We raise our premium growth forecast for 2021 to 6.3%.
  • Surging home construction prices are raising claims severity in the short term.
  • Low investment yields will continue to curb future sector profitability.

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Insurance Monitoring US property & casualty outlook: economic reopening leads to diverging claims trends

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