P/C Direct Premium Written Up 4.5 Percent

Direct premium written (DPW) for property/casualty insurance companies continues to increase, albeit gradually. At year-end 2016, approximately $606 billion of DPW was reported, a record high for the industry. For 2016, total DPW for all P/C insurers aggregately increased 4 percent from 2015, an increase of $23.4 billion. Through the second quarter of 2017, the industry’s growth trend has continued, as DPW for all P/C insurers aggregately increased 4.5 percent from 2016.

For the six months ending June 30, 2017, P/C companies comprising the Top 25 insurers in terms of DPW increased their DPW 13.3 percent during the first six months of 2016. This continues the Top 25 insurers’ impressive display of premium growth and financial stability. The Top 25 accounted for 56 percent of the growth in the P/C insurance industry’s DPW. In contrast, the remainder of the industry reported an increase in DPW of 2.4 percent, or $5.9 billion year over year.

Although the market continues to exhibit signs of firming and DPW continues to increase, P/C insurers should not expect a traditional hard market in the near future. More importantly, it is possible that the double-digit premium growth experienced in the historical hard market cycles may have created unrealistic premium growth expectations for this current recovery.

It is more realistic that expectations should relate to gradual, stable growth. There is always a fair amount of uncertainty in making projections based on second quarter data, but if the industry holds to its 10-year historical pattern, growth in 2017 would again result in the highest level of year-end DPW ever reported by the P/C industry.