US commercial auto insurance premiums increased year over year in the first quarter of 2023, with Liberty Mutual Holding Co. Inc. and Auto-Owners Insurance Co. Inc. posting the biggest growth, according to an S&P Global Market Intelligence analysis.
The sector logged 2.3%, 5.6% and 3% year-over-year growth in commercial auto liability, commercial auto physical damage and total commercial auto premiums, respectively.
Liberty Mutual, Auto-Owners log double-digit growth
Liberty Mutual posted double-digit growth in direct premiums, written at 29.8% year over year in the first quarter.
Continued rate increases are expected to "show up more meaningfully in underwriting margins," Liberty Mutual CEO Timothy Michael Sweeney said during a fourth-quarter 2022 earnings call.
Several Liberty Mutual subsidiaries were among the companies posting the highest rises. A spokesperson for the insurer did not respond to a request for comment regarding the factors behind the insurer direct premiums written growth.
Auto-Owners logged the second-highest increase in direct premiums written at 12.7%.
Carriers benefited from resilient pricing in key commercial lines of business during the first quarter, according to Market Intelligence's analysis.
Four insurers lag
Nationwide Mutual Group, Chubb Ltd., Old Republic Insurance Co. and Berkshire Hathaway Inc. were the only US commercial auto insurers whose direct premiums written declined year over year in the first quarter.
At 6.5%, Nationwide experienced the most significant decline. The Columbus, Ohio-based insurer is aiming "for disciplined growth across financial services, commercial lines and personal lines in 2023," according to an earnings release. The insurer also said that inflation drove higher claims than expected across the property and casualty industry.
Loss ratios deteriorate
Total commercial auto loss ratio deteriorated to 68.6% from 64.1% in the first quarter from a year earlier.
Since 2022, commercial auto business line figures have included physical damage, information that is now broken out in quarterly regulatory statements. Previously, physical damage figures were an amalgamation of incidents across the personal and commercial auto lines, with the former accounting for the bulk of the premiums.
Both Chubb and Zurich Insurance Group AG logged direct loss ratios in excess of 75% during the first quarter. Chubb's loss ratio of 77.9% was the highest among the top 10 US commercial auto insurers, followed closely by Zurich at 77.2%.
Of the top 10 commercial auto insurers, Berkshire Hathaway logged the lowest direct loss ratio during the first quarter at 52.3%.
Combined ratio on the rise
After a decline in 2021, the commercial auto insurance industry's combined ratio exceeded 100% in 2022.
With $60.04 billion in direct premiums and $51.66 billion in net premiums written, 2022's combined ratio reached 105.3%, up from 98.8% in 2021.
This is the fourth time the combined ratio has exceeded 100% in the last five years.
