The US property/casualty (P/C) farm bureau segment has experienced a 13% growth in premiums over the last two years, driven largely by increases in the personal auto, homeowners, and farmowners’ Business lines. This growth is in line with the overall P/C industry’s growth, as noted in a recent report by AM Best.
The report highlights the challenges faced by P/C farm bureaus, including adverse weather events and inflation, which have put strain on earnings for these organizations in 2022 and the first nine months of 2023. Despite the overall premium growth, farm bureaus have displayed a trend of decreased market share in their primary lines of business.
While most farm bureau exposures are centered on short- to medium-tailed personal lines business, these organizations are also beginning to write more business outside their primary states. However, this growth in out-of-state business is often slow and relies on alternative distribution strategies, such as direct-to-consumer sales.
Notably, the AM Best-rated P/C farm bureaus remain well-capitalized, with a historically favorable net income leading to consistent policyholder surplus growth. However, the geographic concentration of these organizations exposes them to heightened catastrophe risk and regulatory pressures. This has led some farm bureaus to diversify their premiums by acquiring smaller insurers outside of their home territories.
The report also mentions that some farm bureaus have mitigated profitability challenges in P/C lines by underwriting life/annuity lines of business. This diversification has provided additional advantages with regard to distribution, pricing, and areas of management expertise.
Moving forward, the report indicates a shift away from annuities and a greater emphasis on protection products within the life/annuity farm bureau segment. This reflects changing consumer demands and market trends.
For the full copy of the special report, interested parties can visit the AM Best website. AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry, with a presence in over 100 countries.
Overall, the report provides valuable insights into the challenges and opportunities facing the US P/C farm bureau segment, shedding light on the historical growth and future prospects of this important sector in the insurance industry.
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