Non-life insurance premiums in the US continue to grow

29 Mar 2016

The US’s non-life insurance segment is set to witness healthy, albeit moderately slower growth in the next four years, supported by the adoption of new technology and an increasing demand for cyber liability insurance, finds a new report by Timetric’s Insurance Intelligence Center.

The non-life segment's gross written premium grew from US$824.4 billion to US$996.3 billion during 2010-2014, at a CAGR of 4.8%. Timetric forecasts the segment's gross written premium to post a CAGR of 4.3% up to 2019, to reach US$1.2 billion -growth that will be driven in part by innovations in the use of technology within the insurance sector and a rising awareness of cyber-crime, which has led to more purchases of cyber risk insurance.

Technological advances are changing customer relationships

Insurers in the US are taking advantage of technological applications to insurance such as telematics equipment and mobile applications that can be used to monitor how safely motorists drive. This can help the insurer to overcome issues of adverse selection and rely less on blunt criteria (such as age and gender) when assessing the risk of drivers, enabling them to price policies more accurately. Furthermore, they also give motorists an incentive to drive in a much safer manner and thus reduce the number of claims pay outs the insurer must meet.

This increased use of telematics is part of the reason for the forecast slowdown in growth of Paid Claims by motor insurers from 4.6% per year during 2010-2014 to 3.8% per year over the next five years.

Demand for cyber liability insurance is rising

The rising frequency and severity of cyber-attacks on companies is increasing awareness among executives of the importance of the benefits of purchasing adequate cover; both for the damage caused by breaches of data and for the interruption to business that can be caused by cyber-crime. The US experienced the highest average data breach cost in 2015 at $6.53m. Furthermore, many cyber liability policies come with advice and guidance for companies on how to reduce their vulnerabilities, adding preventative benefits to the traditional remedial advantages of insurance.

Timetric expects the growth in cyber liability insurance to contribute towards the Liability segment's 5.2% annual rate of growth up until 2019.

All information is based on the Timetric report: 'Non-Life Insurance in the US, Key Trends and Opportunities to 2019'.

Source: Company Press Release