Terrible Start to 2017, but P&C Industry Gaining Strength in Numbers

Recent reports show that U.S. insurers had a tough start to the year, racking up an estimated record of $7 billion in insured damages in the first three months of 2017. Most of those losses were caused by natural disasters that appear to be happening more often. So this is a great time to review the state of the Property & Casualty, or P&C, Insurance industry.

If you own a home, rent an apartment, drive a car, ride a motorcycle, have a boat, or run your own business, then you need P&C insurance. These types of policies protect you when a disaster strikes and give you peace of mind when all is good.

But how do you know if a company is financially strong enough to pay up when the going gets tough? Well, we’re here to help!

Here at Weiss Ratings, we rate over 2,300 P&C insurers that offer various policies. And according to our latest data, the pool of strong insurance options is expanding.

Based on the latest P&C grades, there were 711 companies rated “A” or “B”, therefore meriting inclusion on the Weiss’ Strongest P&C Insurers list. That’s a nice rebound from the three-year low hit in Q2 2015 – up 14.5% through Q3 2016.

Out of those 711, only four received the elite “A+” rating. Citizens Property Insurance Corporation is a state-backed homeowner’s insurer in Florida. Oglesby Reinsurance Company is largely engaged in reinsurance business. Copperpoint Mutual Insurance Company’s focus is in worker’s compensation, and Berkshire Hathaway Assurance Corporation mostly issues financial guaranty policies. They all have carried an “A+” rating since at least 2013, indicating stability and safety in their operations.

Data as of: 05/02/17

But even outside the elite few, the remaining 707 companies on the Weiss strongest P&C Insurers list give you a wide array of other safe insurance choices. For recommended (rated “B+” or higher) homeowner’s and auto insurers, you can check out Weiss’ Recommended Insurers by State. Select your state and insurance type and a list of recommended companies will pop up.

Looking at the states that have the highest percentage of strong insurers based there, Wyoming takes the top spot. Although it has only two insurers, both are strong. Connecticut comes in second with 69.4% of “A” and “B” rated P&C insurers, and Rhode Island is in the third spot with 69.2%.

On the opposite front, Montana and South Dakota were the only states without any strong insurers.

Keep in mind: These findings don’t mean that every insurer you buy a policy from in a state is either strong or weak as many operate across state lines. It tells you more about the state regulator responsible for ensuring the financial strength of an insurer. A state with a large number of strong insurers could indicate that it conducts an effective regulatory system. Conversely, it is possible that weaker insurers might seek to be based in a state known to be more amenable to a flexible application of regulation.

In sum, P&C insurers spread their risk across different regions and lines of business attempting to reduce exposure to potential catastrophic losses. Generally, as long as there are no major natural disasters and available cash is invested profitably, insurers can do well.

But a powerful hurricane, tornado, hail storm, or forest fire can do massive damage to homes, vehicles, boats, and businesses – damages that can cost billions of dollars. In the past, single events have put undercapitalized insurers out of business and hurt their policy holders. So make sure you’re not one of them by only checking your insurer’s safety rating here and only doing business with strong companies.

Until next time,

Gavin Magor

Insurance Insights Edition, By Gavin Magor, Senior Financial Analyst Gavin has more than 30 years of international experience in credit-risk management, commercial lending and insurance, banking and stock analysis and holds an MBA. Gavin oversees the Weiss ratings process, developing the methodology for Weiss’ Sovereign Debt and Global Bank Ratings. Gavin has appeared on both radio and television, including ABC and NBC as an expert in insurance, bank and stock ratings and has been quoted by CNBC, The New York Times, Los Angeles Times, and Reuters as well as several regional newspapers and trade media.