Q1 P/C Direct Premium Written Up 3.5 Percent

Direct premium written (DPW) for property/casualty insurance companies continues to increase, albeit gradually. At year-end 2013, nearly $545 billion of DPW was reported, a record high for the industry. For 2013, total DPW for all P/C insurers aggregately increased 4.1 percent over 2012, an increase of nearly $22 billion. Through the first quarter of 2014, the insurance industry’s growth trend has continued, as DPW for all P/C insurers aggregately increased 3.5 percent over first quarter of 2013.

For the three months ending March 31, 2014, P/C companies comprising the Top 25 insurers in terms of DPW increased their DPW nearly 14 percent over the first three months of 2013. The Top 25 accounted for over 67 percent of the growth in the P/C industry’s DPW. In contrast, the rest of the industry reported an increase in DPW of 1.4 percent, or $1.5 billion, year-over-year.

It is important to note that while increasing DPW, P/C companies have maintained a sufficient level of policyholders’ surplus (PHS). One measure that indicates P/C companies are conservatively leveraged is the DPW to PHS ratio. An insurer’s DPW to PHS ratio is indicative of its premium leverage on a direct basis, without consideration of the effect of reinsurance. Since 2010, this ratio has remained stable at 114 percent.

There is always uncertainty in making projections based on first quarter data, however if the industry holds to its 10-year historical pattern, growth in 2014 would produce the highest level of year-end DPW ever reported by the P/C industry.