The latest study of the U.S. commercial lines insurance market by Fitch Ratings indicates positive growth for insurers in terms of general profitability. Last year marked the third year of steady premium growth, and a stable rating outlook pronouncement by the firm.
Overall, the commercial lines sector showed a 3.6 percent increase in 2013 over the previous year, which, while less than 2012’s growth rate, was supported by a 6-point reduction in reported accident year loss ratio to 66.7 percent. The strongest growth was held by the property related segment, while worker’s compensation and medical professional liability were weaker due to underwriting losses. Regardless of challenges in specific sectors, commercial lines accident year loss ratios are expected continue to show steady improvement in the future as well, though with lower price increases. Currently, underwriting profits are considered the “only viable replacement for falling investment income in the current low yield environment,” the report indicated.
This report is based on Fitch’s Property/Casualty Insurers’ 2013 Financial Results report and in-house methodologies.
For insurers looking to improve their underwriting potential and start leveraging potential for growth, the key is to better harness big data by embracing stronger business analytics solutions. Through predictive analytics, providers will be able to address underwriting losses and start turning the tides with regard to slow growth.
The potential for gains is there, but firms need to have the right tools in place to leverage their data more effectively. Predictive analytics solutions help optimize workflow around data needs, supporting underwriting and claims management and establishing stronger protocols for risk and loss control. This will translate into optimized growth for firms that are struggling and drive accident year loss ratios down even further.
Continued growth and profitability is critical for the professional liability sector, and by balancing data use with predictive analytics, insurers will be able to optimize their approach to the processes that can have the biggest impact on loss and operations.
Beyond data use, investing in a stronger business intelligence platform can help insurers leverage their operations for increased productivity and stronger customer service, optimizing many areas of operation. This boost to performance will translate into sales and profits as well, helping balance out the changes needed for sustained growth that firms need and want moving forward.