Fitch Ratings said today in a report on the auto insurance industry that auto insurers’ recent financial results have been strong, especially in comparison to historical averages. Leading auto insurers have taken advantage of the generally favorable rate environment, declining frequency, and, to a lesser extent, favorable loss cost trends to produce strong earnings and market share gains.
However, insurers that lacked scale, underwriting sophistication, and brand awareness were largely unable to benefit from these positive trends to the same extent as better positioned peers. And, as a result, Fitch believes this latter group will be disadvantaged as competitive and regulatory pressures increase in response to the strong profitability enjoyed by leading auto insurers in recent years.
“Auto insurance touches more consumers than any other form of insurance in the United States because of the prominent role it plays in protecting something near and dear to Americans’ hearts: their cars,” said Gretchen Roetzer, Associate Director, Fitch Ratings.
“These factors combine to make auto insurance an integral part of the personal lines insurance market and a key driver underlying personal lines insurers’ financial health and competitive positioning,” Roetzer continued.
Fitch discusses these results and trends in greater detail in its Special Report on the auto insurance industry, ‘U.S. Auto Insurance: Caution, Road Work Ahead’, now available on the Fitch web site at www.fitchratings.com.