P/C Direct Premium Written Up 4.2% in Q1: Demotech

Direct premium written (DPW) for property/casualty insurance companies continues to increase, albeit gradually. At year-end 2018, total DPW for all P/C insurers aggregately increased approximately 4% from 2017, an increase of $33.3 billion. For year-end 2018, nearly $670 billion of DPW was reported, which was a record-high for the industry. Through the first quarter of 2019, the insurance industry’s growth trend has continued, as DPW for all P/C insurers aggregately increased approximately 4.2% over 2018.

For the three months ended March 31, 2019, P/C companies comprising the top 25 insurers in terms of DPW growth increased their DPW 13.3%, or $2.9 billion, over the first three months of 2018. This continues the top 25 insurers’ impressive display of premium growth and financial stability. The top 25 accounted for 42% of the growth in the P/C insurance industry’s DPW. In contrast, the remainder of the industry reported an increase in DPW of approximately 2.8 percent, or $3.9 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 first-quarter data, but if the industry continues to hold to its 10-year historical pattern, growth in 2019 would again result in the highest level of year-end DPW reported by the P/C industry.