By Michael Loney

June 6 - (The Insurer) - USAA CEO Juan Andrade has said that U.S. personal auto business has reached rate adequacy but homeowners business “is a different story” because of heightened catastrophe losses and a difficult regulatory environment in some states.

Speaking at S&P Global Ratings’ 41st Annual Insurance Conference in New York on Thursday, Andrade said that auto and homeowners are USAA’s two main insurance products.

“From our perspective, auto I think is rate adequate,” he said. “But I think homeowners definitely needs more work, and ultimately we need to get that price for the exposure that you put out.”

Andrade, who took over as CEO of USAA in April after previously leading Everest Group, believes the auto segment is benefiting from the rate increases in recent years.

“I think on the auto insurance side, having come through the inflationary period of '21 and '22 and the rate increases that the industry had to take as a result of all of that, we feel like we're in a pretty good place.”

Andrade said the homeowners line of business is “a different story”. He added that the situation depends on what state a carrier is operating in, with Florida, California and “even Texas” challenging.

USAA in its role as an insurer of military families does not pull out of any states.

“What that basically means is that we have to be incredibly thoughtful about how we underwrite, about our expenses, about the accuracy in claims management and that sort of thing, so we can continue to provide those services and have the availability for our members,” he said.

“But more broadly, you really have to think about what causes the availability issues in homeowners. A lot of that has to do with natural catastrophes and the impact that we have seen since 2017. You also have to look at the regulatory environment in some of these states.”

Giving the commercial lines perspective, Carl Lindner, co-CEO of American Financial Group, said his company is feeling better about rate adequacy for casualty business than previously. But he remains most concerned with commercial auto liability.

“We’ve been taking rate for 10 years in a row but I think until there's a move toward reform and an effort on litigation funding we're stuck in a cycle where the industry is going to have to take rate that stays up with loss ratio trends there,” he said.

Lindner added that AFG is also not sure public D&O rates are adequate.