Fourteen of the 20 largest U.S. private auto insurers saw their loss ratios deteriorate by double-digit percentage points year over year in the second quarter, according to an S&P Global Market Intelligence analysis.
Market leader State Farm Mutual Automobile Insurance Co. saw its loss ratio weaken to 70.1% from 41.3% a year ago, the biggest change recorded as more people resumed driving across the country following pandemic-induced lockdowns in 2020. State Farm's direct premiums written shrank 0.7% to $10.38 billion.
The lockdowns caused a surge in profitability for auto insurers, which the American Property Casualty Insurance Association said in 2020 provided more than $14 billion in refunds and credits to policyholders for reduced driving during the pandemic.
The loss ratios of closest competitors GEICO Corp. and The Progressive Corp. jumped to 73.3% and 65.8% from 50.8% and 43.5%, respectively. GEICO logged the second-highest direct premiums written in the latest quarter of $8.94 billion, up 14.5% from the prior-year period. Progressive was a close third after growing its direct premiums written by 6.5% to $8.91 billion.
Wells Fargo analyst Elyse Greenspan in a research note said higher severity trends are hitting the insurance industry, impacting personal auto companies. While frequency has not returned to 2019 levels for most personal auto players, severity is up when compared to two years ago, she said.
Berkshire Hathaway Inc. in a quarterly filing said GEICO's...
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