Favorable trends have allowed leading auto insurers to produce strong earnings, but winners and losers in the sector will soon be decided by economies of scale and strong marketing, a new report says.
According to the analysis from Fitch Ratings, factors helping earnings grow include a positive rate environment, declining claim frequency, and, to a lesser extent, favorable loss cost trends. These strong earning are especially high in comparison to historical averages, Fitch said.
At the same time, the rating firm found that insurers that lack scale, underwriting sophistication, and brand awareness were largely unable to benefit from these positive trends to the same extent as better positioned peers, and that could eventually hurt them in the long run.
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