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Best’s Special Report: Underwriting Expenses Remain Stable; Higher Advertising Expenditures Fuel Growth for Some

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Press release content from Business Wire. The AP news staff was not involved in its creation.
December 15, 2022 GMT

OLDWICK, N.J.--(BUSINESS WIRE)--Dec 15, 2022--

Increases in U.S. property/casualty insurers’ underwriting expenses have been offset by commensurate increases in net premiums written, which has resulted in stable expense ratios over the past decade, according to a new AM Best report.

In its Best’s Special Report, “Underwriting Expenses Remain Stable, Higher Advertising Expenditures Fuel Growth for Some,” AM Best states that over the past decade, U.S. property/casualty insurers have found controlling underwriting expenses easier than selecting and pricing risks on a net basis. Net underwriting results, reflected in property/casualty insurers’ net loss and loss adjustment expense ratio, have fluctuated due to risk factors that have elevated the incurred loss ratio in certain years. Private passenger auto underwriters, along with workers’ compensation underwriters, have been at the forefront of the industry’s push to use improved technology platforms and enhance operational efficiency in underwriting and claims handling. Despite the increases in expenses, they still have risen at a slower rate than net premiums written.


Insurers have also sought to obtain profitable business through name recognition, mainly advertising and other underwriting expenses, primarily agents’ commissions. A few companies making the greatest use of advertising are by far the leaders in advertising spending, as the five largest advertisers accounted for nearly 70% of all industry advertising in 2021.

“Each of the companies that have spent the most on advertising has a well-known character or mascot associated with its brand, which has enhanced its brand recognition and facilitated sizeable top line premium growth the past five years,” said Christopher Graham, senior industry analyst, industry research and analytics, AM Best. “Progressive, Allstate, Berkshire Hathaway, which owns GEICO, and State Farm all surpassed $1.0 billion in advertising expenditures and have a significant share of the highly competitive and compulsory personal auto market.”

According to the report, of the top 20 companies with the highest advertising expenses as a share of premium, led by Elephant Insurance Company and Lemonade Insurance Company, 10 posted a return on equity below 10% in 2021. At the same time, the report notes that a lower ROE is to be expected from insurtech startups, as they spend heavily on advertising to build market share.


“Higher-rated companies are much more efficient with their underwriting expenses, as shown by their lower expense ratios,” said David Blades, associate director, industry research and analytics, AM Best. “This suggests that strong balance sheets, consistently favorable operating performance, solid business profiles, and effective enterprise risk management, which lead to higher credit ratings, also benefit a company’s market standing.”

To access the full copy of this special report, please visit

A video interview about this report with David Blades and Christopher Graham also is available at


AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information,

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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CONTACT: Christopher Graham

Senior Industry Analyst, Industry

Research and Analytics

+1 908 439 2200, ext. 5743

christopher.graham@ambest.comDavid Blades

Associate Director, Industry

Research and Analytics

+1 908 439 2200, ext. 5422

david.blades@ambest.comChristopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.comAl Slavin


Senior Public Relations Specialist

+1 908 439 2200, ext. 5098




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PUB: 12/15/2022 10:32 AM/DISC: 12/15/2022 10:32 AM