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Auto Insurers Seeing Improved Underwriting Results

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Dec. 13, 2018—U.S. personal auto insurance companies have recently experienced the sector's best underwriting performance in a decade, according to Fitch Ratings and Property Casualty 360.

Material premium rate increases over successive renewal periods and a return to more favorable claims frequency experience are key contributors to the result. A 65 percent industry aggregate statutory direct loss ratio in private passenger auto liability and auto physical damage combined through the first nine months of 2018 represented an improvement of over five points from 2017, according to the report.

Strong performance of the group was driven by the three largest insurers in the group, The Allstate Corporation, GEICO Corporation and Progressive Corporation. Specifically, these insurers benefit most from size and scale advantages that allow for investment in technology to gain pricing and risk selection sophistication, and branding through marketing and advertising.

Strong performance aside, the auto market is beginning to show signs of rate increase fatigue following several years of larger price increases. Premium rates continue to rise and motor vehicle insurance costs increased by 6.7 percent year-over-year as of October 2018, according to Bureau of Labor Statistics data. 

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