State Farm Mutual Automobile Insurance Co.'s personal auto loss ratio surged above the 90% mark in the second quarter while the industry as a whole crept closer to the 80% plateau.
The market leader's ratio ballooned to 93%, a year-over-year increase of 22.9 percentage points from 70.1% in the prior-year period and a 10.8-point rise from the first quarter of 2022, according to an S&P Global Market Intelligence analysis of individual property and casualty filers that submit regulatory statements to the NAIC.
Industry losses piling up
The loss ratio for the personal auto line increased to 78.4% for insurers in the second quarter, a 12.4-percentage-point jump from 66.0% a year ago, and a 6-point increase from 72.4% in the first quarter, according to an S&P Global Market Intelligence analysis of individual property and casualty filers that submit regulatory statements to the NAIC.
Second-quarter direct written premiums were basically flat year over year at $66.86 billion, but down slightly from the first quarter.
The increase in loss ratios was caused by "medical inflation, increased utilization of medical treatments and higher severities of attorney-involved claims," said Tim Zawacki, principal research analyst, in an S&P Global Market Intelligence analysis. Zawacki added that severities "across all coverages were impacted by longer times to close claims due to automotive supply chain disruptions and labor shortages."
Double-digit increases
State Farm, which saw its direct written premiums rise 7.1% year over year to $11.20 billion, was one of six companies with year-over-year double-digit increases in loss ratio among the 10 largest personal auto insurers based on second-quarter 2022 direct premiums written. All 10 carriers reported year-over-year increases in loss ratios in the quarter.
Zawacki said in a recent analysis that State Farm's private auto physical damage loss ratio for the second quarter stood at 87.2% while facing "material deterioration in private auto liability results." He said the private auto liability loss ratio rose 33.4 percentage points year over year to 97.5%, a figure that was 21.8 points higher than its ratio of 75.7% in the first quarter.
American Family Insurance Co. had the second-highest year-over-year jump, 21.3 points, to 82.7%, while The Travelers Cos. Inc. rose 16.1 points to 70.4%. Berkshire Hathaway Inc.'s GEICO Corp. was up 13.1 points to 86.4%, and Nationwide Mutual Insurance Co. had a 10.7-point increase to 68.4%.
The Progressive Corp. had the smallest loss-ratio increase and the second-lowest ratio among the top 10: 2.5 points to 68.3%. Farmers Insurance Group of Cos. had the lowest ratio in the top 10 at 67.3%, a 6.3-point jump.
