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The auto insurance market is rebounding, but reinsurers are still hesitant to get in the game.

Let’s look at the macro factors behind that resistance and why now is the time to reevaluate.

The Macro Perspective

Auto has historically been a challenging sector of the insurance business. 

Major reinsurers, especially those managing multibillion-dollar portfolios have been bypassing auto.

Their criteria focus is on which lines of business they can write: more profitability – homeowners, flood, earthquake, commercial auto, and private passenger auto – which is where we sit at VERVE.

The Performance Reality

Auto insurance has been particularly tough since COVID. 

Industry giants like Allstate, State Farm, and GEICO have reported significant losses—sometimes as much 20 cents on the dollar for auto. 

But that storm is passing. 

Progressive has started making money again with a personal auto combined ratio landing 84.5% in Q1 2024.  Additionally, many regional insurers had their best year in 2023 and the industry generated a ratio of approximately 94.0% for Q1 2024 down from 102.2%

Rates have also been on an upward trajectory for over two years, which is turning the market around from red to green.

The Strategic Opportunity

This market shift makes today an opportune time for reinsurers to reconsider auto. 

The logic is straightforward: 

If the macro environment is improving and rates are rising, why not partner with auto insurance companies that are outperforming the market? 


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