State Farm has once again claimed the top position in AM Best’s rankings of US Property and Casualty (P&C) insurers for 2023, reinforcing its dominance in the market. The company’s total net premiums written (NPW) surged by an impressive 19.1% to $92.6 billion, further widening the gap between itself and its competitors.
Dominance in the P&C Sector
In the dynamic world of insurance, rankings can be both stable and surprising. Here, we explore the latest shifts among top US Property and Casualty (P&C) insurers, spotlighting substantial changes in Net Premium Written (NPW) and remarkable performances by key players.
Key Insights
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State Farm’s Dominance:
- State Farm leads the industry with a $15.4 billion advantage in NPW over second-place Berkshire Hathaway.
- Berkshire Hathaway reported $77.2 billion in NPW.
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Progressive Insurance Group’s Growth:
- Retains third place with the highest percentage increase among the top 20 companies.
- Achieved a 20.4% rise to approximately $61.5 billion in NPW.
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Top 100 US P&C Insurers Shifts:
- Munich Re’s American business fell from rank 17 to 21 due to a 6.2% decrease in NPW, totaling $8.6 billion.
- Everest ascended from rank 21 to 19 with approximately $9.3 billion in NPW.
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Re/Insurer Performances and Changes:
- Swiss Re dropped from rank 33 to 56 with a 43.7% decrease in NPW to $2.4 billion.
- Newcomers to the top 100 include:
- Western National Insurance
- Trupanion Insurance
- Safety Group
- Skyward Specialty Insurance, which saw a 34.8% increase to $911 million, climbing 17 places to rank 99.
This snapshot showcases the noteworthy movements within the competitive landscape of US P&C insurers, highlighting both consistent leaders and dynamic newcomers.
The Impact of Mid-July Storms
In mid-July, State Farm encountered a major challenge with around 14,000 claims filed due to severe convective storms that swept from Minnesota and Iowa to Pennsylvania and New York. Between July 13 and 17, these storms unleashed intense winds, large hail, and heavy rainfall, also affecting southern Ontario.
Insured damages in the US and Canada could potentially reach or exceed hundreds of millions of dollars due to the storms hitting major metropolitan areas, including Chicago, Toronto, and Minneapolis-St. Paul. “The impact of the July storms across several states and Canada is a stark reminder of the unpredictable force of nature,” an Aon representative noted.
State Farm spokesperson Benjamin Palmer reported approximately 10,000 fire/homeowners and 4,000 automobile claims across nine states, primarily citing wind damage of low severity. Aon pointed out that the derecho on July 15 resulted in 35 tornadoes, setting a record with 24 confirmed tornadoes in the Chicago County warning area.
California’s Insurance Crisis and State Farm’s Rate Hike Proposal
Amid these operational challenges, State Farm is navigating another significant issue—its proposal to increase home insurance rates in California. California’s Department of Insurance received a request from State Farm to raise home insurance rates by 30% for homeowners, 36% for condo owners, and 52% for renters. This move comes as the state grapples with an ongoing insurance crisis, with several insurers limiting or ceasing operations due to the growing risks of climate disasters.
Insurance Commissioner Ricardo Lara expressed concerns about the proposal, stating, “State Farm General’s latest rate filings raise serious questions about its financial condition,” underscoring the need for a comprehensive evaluation before making a decision that could affect millions of Californians. The department typically averages 180 days per rate review, a timeline influenced by recent massive fires in the state.
State Farm had previously increased home insurance rates by 20% in March. Despite these rate hikes hinting at financial challenges, the company’s 2023 net income surged over 100% year-over-year to $1.2 billion. The company emphasized that the latest rate hike request aims to improve its financial situation and long-term sustainability in California, where the variability and severity of weather-related events pose significant challenges.
Broader Market Trends and Insights
The broader insurance market is witnessing significant shifts driven by the increasing frequency and severity of weather-related events. These trends highlight the importance of financial stability and effective risk management strategies for insurers. AM Best’s rankings provide a crucial assessment of insurers’ positions and financial health, serving as a benchmark for industry stakeholders.
California’s insurance crisis exemplifies the challenges faced by both insurers and policyholders in regions prone to climate-related risks. The regulatory framework for insurance rate changes plays a critical role in balancing the financial viability of insurers with the need to protect consumer interests.
Conclusion
State Farm’s continued leadership in the US P&C insurance market, its response to mid-July storms, and its efforts to address financial sustainability in California underscore the dynamic and complex nature of the insurance industry. The company’s ability to adapt and respond to these challenges will be crucial in maintaining its market position and ensuring long-term success.
For further insights into industry trends and State Farm’s strategic initiatives, stay tuned to our news updates.