Auto Profits Collapsed in 2015
The profits of auto insurers declined sharply in 2015 as the recovering economy brought more drivers onto roads in the U.S. and more accidents were recorded. The latest data from the National Association of Insurance Commissioners (NAIC) shows that profit margins for personal auto fell to 3.1 percent in 2015, compared with 4.9 percent the previous year. The profit margin for 2015 was the lowest since the 2.7 percent in 2011 and substantially lower than the 10-year average of 5.2 percent.
Profit declines were seen in three-fourths of the states, including the four largest markets—
California, Texas, New York and Florida—and six of the top 10. Personal auto’s 2.7 percent return on net worth was far lower than the 12.7 percent average earnings for all of the nation’s industries in 2015. The 10-year average return on net worth for personal auto was 5.4 percent, compared with 13.3 percent for all industries.
Profits for commercial auto were very similar. The profit margin for commercial auto in 2015 was 2.9 percent, compared with 4.5 percent the previous year and 8.9 percent average for the 10 years ending in 2015. The commercial auto profit margin for the lowest since the 1.1 percent recorded in 2002. The commercial auto return on net worth in 2015 was a disappointing 2 percent