U.S. commercial auto liability insurance premiums remained relatively flat in the third quarter of 2022, posting a decrease of less than half a percentage point from the previous year, according to an analysis by S&P Global Market Intelligence.
Excluding The Progressive Corp., which saw a nearly 30% premium decline due to the renewal timing of certain transportation network company, or TNC, policies, commercial auto liability premiums grew 6.4% during the third quarter.
Only four of the largest 10 U.S. commercial auto insurers saw a decline in direct premiums during the third quarter. When factoring in commercial auto physical damage, total U.S. commercial auto direct premiums written for the third quarter stood at $13.93 billion.
The loss ratio for commercial auto liability excluding physical damage for the third quarter deteriorated from 72.3.% in the second quarter of 2022 to 72.9% and was also a deterioration from 66% in the prior-year period. The total commercial auto loss ratio for the third quarter was 65.9%.
Starting in 2022, the figures for commercial auto include physical damage within the business line, as this information is now broken out within quarterly regulatory statements. In prior periods, physical damage included both personal and commercial auto, with personal auto accounting for the bulk of the premiums.
Progressive still in front as TNC renewal schedule balances out
With a 28.3% decline in liability direct premiums written year over year, Progressive was the only insurer among the 10 largest in the U.S. to see a double-digit decline, but it still remained the largest U.S. commercial auto insurer.
In its Form 10-Q for the quarter, Progressive attributed the decrease in growth to the renewal schedule of its transportation network company policies, which involve companies such as Uber and Lyft. The company said, excluding the impact of these policies, commercial net premiums grew 2% during the third quarter.
"During the first quarter 2022, we renewed certain TNC policies on a 12-month basis that were previously written on a 6-month basis and, therefore, had renewed in prior years during the third quarter. As a result, commercial lines premiums written growth was positively impacted in the first quarter 2022, while the third quarter 2022 premium growth experienced an unfavorable impact," the company said. As previously reported, Progressive posted a 36.3% increase in the first quarter.
Although representing a lower market share of 2%, Fairfax Financial Holdings Ltd. saw the largest year-over-year premium growth, rising 123.7%.
Despite a high direct loss ratio, at 15.1% The Allstate Corp. saw the second-highest growth in commercial auto liability direct premiums. In its Form 10-Q, Allstate said the premium growth was driven by rate increases.
Allstate tops loss charts
At 92.4%, Allstate logged the largest incurred loss ratio among the top 10, an improvement from 117.8% in the second quarter of 2022.
In their Form 10-Q filing for the third quarter, Allstate attributed the loss ratio to a number of factors, including higher gross claim frequency, increased severity for all coverages and unfavorable prior-year reserve reestimates.
According to its Form 10-Q, Allstate is "executing a comprehensive plan to improve profitability, including broadly raising rates, reducing operating expenses and advertising, implementing underwriting restrictions in underperforming states and executing claims operating actions to manage loss costs."
Auto-Owners Insurance Co. Inc. booked the second-highest loss ratio for the quarter at 89.7%.
The Travelers Cos. Inc. posted the lowest direct incurred loss ratio for the third quarter. During a third-quarter earnings call, Travelers CEO Alan D. Schnitzer briefly touched on the topic, describing the pricing environment as "strong."
"Overall commercial pricing is near record levels," he said. "The breadth of the pricing gains are very good. We always look to retention to give us a sign on the strength of pricing, retention really is ... there at very high numbers."
