The Road Ahead, Trends in the U.S. Auto Insurance Market

29 November 2017

• Rate increases going back to 2014 and continuing through 2017 are, in many cases, now offsetting adverse trends and driving welcome margin improvement
• Barring a sharp reversal in loss cost inflation, JLT Re expects to see further rate strengthening and insurers' auto margins improve in 2017-18 as this momentum continues to earn into revenues

JLT Re, the global provider of reinsurance broking and consultancy, has today released a new report on the trends in the U.S. Auto Insurance Market - The Road Ahead. This new report examines loss frequency trends in U.S. auto insurance lines as innovative technology like autonomous and semi-autonomous cars bring new challenges—and risks, for auto-related products.

Commenting on the report, Mark Shumway, Global Head of Strategic Advisory for JLT Re said, “although accident year results remain subject to elevated levels of systemic risk pressure from adverse loss frequency and severity trends, now is a good time to be a top tier provider of auto insurance in the United States.”

Barring a sharp reversal in loss cost inflation, JLT Re expects to see further rate strengthening and insurers' auto margins improve in 2017-18 as this momentum continues to earn into revenues.

“Low (to date) inflation and nearly three years of rate increases are now offsetting otherwise adverse trends, driving perhaps the best conditions for personal and commercial auto insurers we’ve seen in many years,” Shumway continued.

David Johnson, Executive Vice President of JLT Re’s Transportation practice added, “Auto losses soared by 13% in 2016 with carriers experiencing historically high loss ratios driven by increasing frequency and severity. Initial estimates for private passenger auto alone expected an additional 7% increase in 2017. However, with recent hurricanes Harvey and Irma, the end result could be even higher.”

us auto fig 1

Source: SNL Financial, JLT Re

us auto fig 2

Source: ISO, Bloomberg data, JLT Re (indexed)

“Increasing losses have been driving insurers, both private and commercial, to increase premium rates considerably — a trend expected to continue throughout 2017 and into 2018,” Johnson concluded.

Rates plus new technological and analytical advances will require auto insurers to re-imagine customer experience, redefine traditional underwriting practices, and rethink market strategy. Read the full report here



Helen Ferris
Tel: +44 (0)207 5583388

Elizabeth Miller
Tel: +1 215 309 4590


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Jardine Lloyd Thompson is one of the world’s leading providers of insurance, reinsurance and employee benefits related advice, brokerage and associated services. JLT’s client proposition is built upon its deep specialist knowledge, client advocacy, tailored advice and service excellence.
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