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Vehicle cover drives US personal lines growth

Steady growth is forecast for personal lines insurance in the US, driven by strong premium gains in motor insurance.

Moody’s latest sector outlook says personal lines premium written has continued its steady growth, up 6.7% in the first half of the year compared with 6.4% last year and 5.9% in 2016. Personal motor premium provided the lion’s share and is expected to stay strong next year.

Motor insurance achieved strong profitability through earned rate increases and lower loss cost trends. Net written premium grew 12% in the first nine months compared with the previous year, the ratings agency says.

Rising profitability should increase competition, meaning motor rate rises should slow to the low single digits next year.

Hurricanes Florence and Michael and the Californian wildfires will add billions of dollars to this year’s insured losses, but they will still come in below last year’s levels.

However, insurers will probably raise rates through next year to counter cost inflation for reconstruction and high losses, Moody’s says.

They will likely reassess flood exposure in their motor books and California wildfire exposure in their homeowners’ business.

Moody’s outlook for the US mortgage insurance sector is also positive.

Strong profits are expected over the next 12-18 months as credit losses remain low and higher levels of insurance inforce push up earned premiums. Stringent loan underwriting standards have helped profitability.

Life insurance sales should rise next year as the economy grows and interest rates increase, Moody’s says.