A Message from Divisional President, Michael Csorba
As we look forward to the New Year, I want to highlight a few 2022 events that will continue to impact the market in 2023, namely Hurricane Ian and its effect on reinsurance, inflation, and discipline.
Hurricane Ian caused insured losses of $60 billion, which ranks as the second-costliest hurricane after Katrina in 2005. This storm compounded an already challenging property cat reinsurance market for 1/1 renewals and affected the rates that marine reinsurers require for their cat capacity. All primary carriers will have increased reinsurance costs in 2023. Many companies will try to pass it along in the form of higher pricing.
Inflation was more than a buzzword in 2022. It impacted all of us at the food store, at the pump, and in many areas of our lives as interest rates were raised seven times to try to temper it. In the insurance business, claims inflation increased as the cost of commodities, parts and labor affected many lines of business. Fortunately, there are signs that inflation is moderating in 2023, so hopefully car, boat and home prices will become more reasonable and loss trends will return to long-term averages.
Per AM Best the US Ocean Marine loss ratio improved in 2020 by 4.5pts and in 2021 by 3.1pts, while premiums grew by 7.2% and 13% respectively. Stay tuned for 2022 results in a future Tide-Ings edition. To thrive as a specialty business, Ocean Marine needs discipline….in pricing, controlling aggregations, line sizes, and claims reserving. During the last three years the market has had discipline and I expect that will continue in 2023.
Thank you for your continued support of Great American and for all the great you do.