Market Overview

Best's Market Segment Report: AM Best Maintains U.S. Commercial Lines Insurance Market Outlook at Stable


AM Best has maintained a market segment outlook of stable on the U.S. commercial lines industry for 2020, citing factors such as improved market conditions and solid levels of risk-adjusted capitalization that have helped insurers weather short-term profitability challenges.

A new Best's Market Segment Report, titled, "Market Segment Outlook: U.S. Commercial Lines," notes that commercial lines pricing strengthened in 2019 and pressure on terms and conditions lessened. In addition, the workers' compensation segment remains a strong performer, despite continued pressure on rates. The impact of social inflation on current-year losses and prior-year loss reserves for casualty lines remains a key headwind facing the overall commercial lines segment. Societal views of corporate liability, third-party involvement in litigation financing and the emergence of "reviver" legislation extending the statute of limitations on sexual abuse claims have expanded the effects of social inflation into general liability and directors and officers liability. Gauging how effective the industry's actions will be in addressing social inflation will be difficult given that many of the factors driving it remain prevalent. Other negative factors include property losses being above long-term averages and continued uncertainty about emerging casualty exposures such as cyber liability, opioids and e-cigarettes.

AM Best believes the momentum of price increases across commercial lines is accelerating, with companies and producers reporting higher rates as 2019 played out. On the property lines side, the pricing actions reflect catastrophe losses in the United States and globally in recent years, with 2016 through 2018 exceeding long-term averages. However, reinsurers in 2019 have put forth higher rates and capacity restrictions to address loss trends. According to the report, some of the largest rate increases in 2019 fell to the commercial property sector.

The report outlines other factors that are driving the stable market segment outlook, including:

  • AM Best expects overall current market conditions — price increases and maintenance of discipline with respect to terms and conditions—to continue through 2020; however, the commercial automobile line remains challenged despite several years of substantial rate increases;
  • Although underwriting results have varied in recent years, due primarily to elevated catastrophe losses, overall operating and net results remain profitable, demonstrating an ability to increase capital organically; and
  • Industry surplus resumed an upward momentum in 2019, with the markets rebounding and lower reported catastrophe losses, and has surpassed its year-end 2017 level.

To access the full copy of the U.S. commercial lines market segment report, please visit

To view a video with AM Best Director Jennifer Marshall about the U.S. commercial lines outlook, please visit

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2019 by A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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