AdvisorSmith Finds the Most and Least Profitable Types of Property & Casualty Insurance

The most and least profitable states varied due to population and market size
 
NEW YORK - April 15, 2021 - PRLog -- AdvisorSmith, a leading resource for insurance and small business contest, released its newest analysis. They analyzed the average profitability of 19 lines of property and casualty insurance to find the most and least profitable types of property and casualty (P&C) insurance in the U.S.

To find the most and least profitable insurance, AdvisorSmith examined data published by the National Association of Insurance Commissioners (NAIC). They analyzed the profitability of various insurance lines by state for the past five years from 2014 through 2019.

Advisorsmith took the average return on net worth across the five years for each line to determine the average profitability. They found that the property and casualty insurance industry's average profitability was 7 percent over the past five years.

They ranked the 19 lines by their average profitability over the study period. The 21 lines of insurance's average profitability ranged from as low as one percent of net worth up to a maximum of 30.5 percent of net worth.

The most profitable line of P&C insurance was mortgage guaranty insurance. This insurance line is relatively small, accounting for about $6 billion in written premiums in 2019. Still, profits in the line have been steadily rising, buoyed by rising home prices, low mortgage rates, and low rates of default.

The least profitable insurance line was commercial auto liability, with an average profitability of only 1 percent. Underwriting losses in commercial auto liability have been higher than most other insurance lines, leading to chronically low profitability in the line.

AdvisorSmith also examined the profitability of all insurance lines across all 50 states and the District of Columbia.

To determine the profitability, they calculated the return on net worth across all states' lines. They then ranked the states based upon their average profitability over the five-year study period.

The profitability of insurance varies widely by state, with the range of profitability being as low as 0.2 percent, up to a high of 17.7 percent.

The most profitable state was Vermont, with an average profitability of 17.7 percent.

The least profitable state was Colorado, with an average profitability of 0.2 percent.

To see the complete study, visit https://advisorsmith.com/data/most-and-least-profitable-types-of-property-casualty-insurance.

AdvisorSmith is a leading information resource for small business owners. AdvisorSmith empowers small businesses with original research and insights into trends to help them succeed. For more information, visit https://advisorsmith.com or follow us on Twitter @AdvisorSmithInc.

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Brenda Franco
***@advisorsmith.com
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