NAIC’s Deep Dive Into Profitability By Line & By State

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How the NAIC compiles its data for the annual Profitability By Line By State Report

The National Association of Insurance Commissioners has released its annual report highlighting the various profitability levels in the Property & Casualty industry by both line of insurance and state. This report provides a wealth of information through an aggregation of various data points culled from annual statements. In particular, the report highlights the various components of estimated profits including:

• premiums earned;
• losses incurred;
• loss adjustment expense;
• general expenses;
• selling expenses;
• state taxes;
• licenses and fees;
• dividends to policyholders;
• changes in premium deficiency reserves;
• underwriting profits;
• investment income and federal income taxes.

As fluctuations in calendar year financial results occur, long-term historical averages are also provided.

Key highlights from this year’s report:

The NAIC highlighted the following data points from this year’s report:

• Total premiums earned increased in 2021 for the 12^th consecutive year, while losses incurred and loss adjustment expenses remained relatively flat.
• The countrywide direct return on net worth for the total property and casualty insurance market was 6.5% for 2021.
• Private Passenger Auto (PPA) makes up a large portion of the property and casualty market, accounting for approximately 34% of the total direct premiums earned in 2021.
• The return for PPA decreased from the prior year, moving from 10.5% in 2020 to 4.2% in 2021, with the 10-year average being 4.9%.

Select Data from the Profitability Report

Please note the following is only select data that we have chosen from this year’s report and which we thought would be of most interest to our readers. The report, however, contains much more detailed data on each state’s profitability by line. As always, please refer to the full report (which can be accessed below) if planning to rely on any of the data presented below.

Percent of Direct Premiums Earned Countrywide – Direct and Net Premiums Earned Countrywide – IEE

LINE OF BUSINESS	DIRECT PREMIUMS EARNED (000S)	NET PREMIUMS EARNED (000S)
Private Passenger Auto Liability	151,755,049	147,456,116
Private Passenger Auto Physical	106,671,537	103,024,068
Private Passenger Auto Total	258,426,585	250,480,184
Commercial Auto Liability	38,944,831	33,235,932
Commercial Auto Physical	11,710,691	10,304,714
Commercial Auto Total	50,655,522	43,540,646
Homeowners Multiple Peril	114,011,610	99,736,986
Farmowners Multiple Peril	4,839,913	5,186,258
Commercial Multiple Peril	47,985,948	42,262,558
Fire	16,848,682	14,528,386
Allied Lines	36,070,950	22,873,377
Inland Marine	27,650,625	16,352,272
Medical Professional Liability	10,813,472	9,720,577
Other Liability	94,036,311	77,645,132
Products Liability	4,240,840	3,445,731
Workers Compensation	51,566,186	44,741,984
Mortgage Guaranty	6,038,253	4,850,224
Financial Guaranty	408,030	440,852
Accident and Health	6,629,673	8,781,299
Warranty	3,057,590	1,187,523
All Other	24,505,374	47,899,130
Total All Lines	757,785,563	693,673,119

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Profitability by Line of Insurance in Massachusetts

LINE OF BUSINESS	DIRECT PREMIUMS EARNED (000S)	LOSSES INCURRED (% of Direct Premiums Earned	UNDER-WRITING PROFIT	EARNED PREM TO NET WORTH
Private Passenger Auto Liability	3,069,766	55.9	10.0	78.2
Private Passenger Auto Physical	2,526,830	63.6	2.6	112.6
Private Passenger Auto Total	5,596,596	59.4	6.6	90.7
Commercial Auto Liability	789,449	41.2	23.9	62.5
Commercial Auto Physical	281,457	51.5	14.2	104.5
Commercial Auto Total	1,070,906	43.9	21.4	69.9
Homeowners Multiple Peril	2,737,030	38.2	24.2	90.3
Farmowners Multiple Peril	4,372	(9.6)	74.6	90.4
Commercial Multiple Peril	1,451,984	37.8	18.6	67.8
Fire	360,228	36.1	34.8	90.0
Allied Lines	433,616	21.2	52.3	80.3
Inland Marine	652,666	46.9	17.9	108.6
Medical Professional Liability	349,665	48.2	0.1	29.9
Other Liability*	2,866,514	49.0	15.4	47.2
Products Liability	130,257	53.1	(14.9)	32.3
Workers Compensation	1,214,416	61.3	(0.4)	38.0
Mortgage Guaranty	129,468	(2.2)	78.5	85.5
Financial Guaranty*	4,247	178.9	(426.2)	21.7
Accident and Health	102,658	67.6	6.2	33.9
Warranty	19,461	58.1	32.5	34.0
All Other*	560,197	30.5	28.0	72.9
Total All Lines	17,684,283	48.4	15.1	66.6

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Profitability by Line of Insurance in Connecticut

LINE OF BUSINESS	DIRECT PREMIUMS EARNED (000S)	LOSSES INCURRED	UNDER-WRITING PROFIT	EARNED PREM TO NET WORTH
Private Passenger Auto Liability	1,994,989	68.5	(3.8)	70.0
Private Passenger Auto Physical	1,168,893	72.6	(3.6)	120.1
Private Passenger Auto Total	3,163,883	70.0	(3.7)	82.7
Commercial Auto Liability	425,023	60.1	4.1	58.0
Commercial Auto Physical	109,228	55.8	11.3	102.0
Commercial Auto Total	534,251	59.2	5.6	63.6
Homeowners Multiple Peril	1,660,992	51.1	14.0	86.5
Farmowners Multiple Peril	7,876	22.9	41.2	89.0
Commercial Multiple Peril	720,104	67.1	(13.5)	59.7
Fire	164,222	30.7	39.9	83.3
Allied Lines	236,074	43.2	31.7	88.2
Inland Marine	387,580	40.1	26.0	111.3
Medical Professional Liability	232,337	89.9	(33.4)	36.1
Other Liability	1,382,166	60.6	(1.4)	40.9
Products Liability	59,635	88.1	(42.4)	33.1
Workers Compensation	705,527	56.6	5.4	35.4
Mortgage Guaranty	79,348	(1.0)	77.9	82.4
Financial Guaranty*	2,107	(75.6)	69.2	11.4
Accident and Health	65,367	74.9	0.2	32.6
Warranty	8,964	44.9	48.2	33.1
All Other	281,663	66.1	(16.3)	63.0
Total All Lines	9,692,097	61.0	2.4	62.2

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Profitability by Line of Insurance in Maine

LINE OF BUSINESS	DIRECT PREMIUMS EARNED (000S)	LOSSES INCURRED	UNDER-WRITING PROFIT	EARNED PREM TO NET WORTH
Private Passenger Auto Liability	415,091	60.7	6.7	80.0
Private Passenger Auto Physical	404,861	62.2	6.0	119.1
Private Passenger Auto Total	819,952	61.4	6.4	95.5
Commercial Auto Liability	121,898	50.0	16.3	63.8
Commercial Auto Physical	61,781	47.5	18.9	108.0
Commercial Auto Total	183,678	49.2	17.2	74.0
Homeowners Multiple Peril	480,786	32.9	32.4	92.1
Farmowners Multiple Peril	6,299	36.5	27.1	95.7
Commercial Multiple Peril	280,454	34.1	23.7	73.8
Fire	59,659	23.9	48.4	99.1
Allied Lines	72,275	27.8	48.7	104.9
Inland Marine	100,085	66.3	(1.7)	101.6
Medical Professional Liability	50,389	45.2	10.1	36.4
Other Liability	227,505	45.9	19.6	50.1
Products Liability	10,821	11.1	50.4	48.1
Workers Compensation	246,440	64.0	(8.5)	41.4
Mortgage Guaranty	20,142	(3.7)	80.7	88.6
Financial Guaranty*	220	0.0	6.1	15.6
Accident and Health	15,218	91.1	(21.8)	23.5
Warranty	4,832	47.5	45.0	42.7
All Other	95,617	34.2	23.3	75.2
Total All Lines	2,674,372	48.0	16.5	72.7

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Profitability by Line of Insurance in New Hampshire

LINE OF BUSINESS	DIRECT PREMIUMS EARNED (000S)	LOSSES INCURRED	UNDER-WRITING PROFIT	EARNED PREM TO NET WORTH
Private Passenger Auto Liability	459,249	52.7	16.7	82.1
Private Passenger Auto Physical	466,773	61.2	7.9	116.7
Private Passenger Auto Total	926,022	57.0	12.3	96.5
Commercial Auto Liability	123,276	30.7	38.6	62.3
Commercial Auto Physical	50,430	45.7	20.7	105.7
Commercial Auto Total	173,706	35.0	33.4	70.7
Homeowners Multiple Peril	465,041	40.8	25.3	90.6
Farmowners Multiple Peril	3,414	35.8	26.5	93.0
Commercial Multiple Peril	282,028	44.5	13.1	70.1
Fire	49,675	18.5	48.2	92.9
Allied Lines	50,843	26.4	52.3	101.2
Inland Marine	114,249	34.7	29.5	113.9
Medical Professional Liability	51,387	64.3	(19.3)	28.6
Other Liability	271,618	38.8	26.3	49.3
Products Liability	13,312	12.5	30.3	41.6
Workers Compensation	216,305	47.3	12.8	36.2
Mortgage Guaranty	31,752	(1.9)	78.1	104.3
Financial Guaranty*	244	0.0	9.1	16.2
Accident and Health	20,487	63.3	9.0	33.6
Warranty	5,734	42.7	51.1	37.0
All Other	80,526	25.3	35.0	77.4
Total All Lines	2,756,343	45.2	20.4	70.7

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Profitability by Line of Insurance in Rhode Island

LINE OF BUSINESS	DIRECT PREMIUMS EARNED (000S)	LOSSES INCURRED	UNDER-WRITING PROFIT	EARNED PREM TO NET WORTH
Private Passenger Auto Liability	670,224	59.8	8.6	78.7
Private Passenger Auto Physical	368,808	65.5	4.6	123.9
Private Passenger Auto Total	1,039,032	61.8	7.2	90.4
Commercial Auto Liability	109,517	51.0	15.8	61.3
Commercial Auto Physical	32,606	52.3	13.8	103.1
Commercial Auto Total	142,122	51.3	15.4	67.6
Homeowners Multiple Peril	475,651	52.5	13.0	89.9
Farmowners Multiple Peril	467	36.3	27.8	97.0
Commercial Multiple Peril	189,963	40.5	19.0	63.9
Fire	51,730	49.3	20.4	85.3
Allied Lines	83,436	36.4	37.0	94.6
Inland Marine	93,304	61.3	0.1	91.2
Medical Professional Liability	35,361	176.0	(132.4)	23.8
Other Liability	334,309	55.2	10.2	43.1
Products Liability	13,676	65.4	(63.6)	32.5
Workers Compensation	205,634	48.6	7.9	48.6
Mortgage Guaranty	19,177	(3.1)	80.0	84.3
Financial Guaranty*	550	0.0	0.2	7.4
Accident and Health	39,157	36.6	44.8	91.0
Warranty	2,213	65.5	28.3	41.5
All Other	104,874	25.8	35.2	62.7
Total All Lines	2,830,657	54.9	10.7	69.5

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Profitability by Line of Insurance in Vermont

LINE OF BUSINESS	DIRECT PREMIUMS EARNED (000S)	LOSSES INCURRED	UNDER-WRITING PROFIT	EARNED PREM TO NET WORTH
Private Passenger Auto Liability	180,942	51.6	16.7	83.4
Private Passenger Auto Physical	214,620	58.2	10.5	120.5
Private Passenger Auto Total	395,562	55.2	13.3	100.2
Commercial Auto Liability	54,378	33.8	34.3	64.5
Commercial Auto Physical	31,476	43.0	23.4	107.6
Commercial Auto Total	85,854	37.2	30.3	75.6
Homeowners Multiple Peril	223,314	40.8	23.3	91.7
Farmowners Multiple Peril	16,202	40.2	22.0	93.1
Commercial Multiple Peril	149,344	26.4	34.2	75.7
Fire	38,730	42.3	28.3	102.2
Allied Lines	30,148	17.6	60.6	97.8
Inland Marine	52,219	31.0	35.2	109.3
Medical Professional Liability	19,074	37.6	10.9	31.9
Other Liability	140,311	44.4	18.4	45.6
Products Liability	7,429	35.5	32.5	36.2
Workers Compensation	165,662	72.2	(11.7)	42.9
Mortgage Guaranty	11,943	(2.4)	79.0	106.8
Financial Guaranty*	266	0.0	9.1	30.9
Accident and Health	15,350	99.9	(23.9)	42.0
Warranty	7,524	27.9	47.6	35.9
All Other	26,942	(31.6)	108.2	47.2
Total All Lines	1,385,873	45.1	20.4	69.9

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How to access the full report

The NAIC has made this report available for free on its website. For those interested in accessing it, please access the NAIC website.