The Commercial Auto segment recorded its first underwriting loss in eight years in 2011 due to a combination of declining premiums, increasing claims severity and a reduction in favorable prior-year reserve releases, a new report reveals.
In its “Commercial Auto Market Update,” Fitch Ratings says the line posted a combined ratio of 103.6 in 2011. Fitch says that on an accident-year basis and examining only liability for Commercial Auto, the underwriting losses began in 2009.
Net written premiums in 2011 were around $21 billion—21 percent lower than the line's peak level in 2006. “This decline is attributable to years of declining premium-rate trends in a competitive market environment, as well as reductions in insured exposures as Commercial Auto was significantly affected by the economic recession,” says Fitch.
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