In a report, S&P Global Market Intelligence is projecting that U.S. personal and commercial auto insurers will see a sharp improvement in their full-year combined ratios for 2020, followed by some deterioration in 2021.

However, the extent of the improvement will vary by sector, according to the newly released U.S. Auto Insurance Market Report.

S&P Global Market Intelligence expects the combined ratio for private auto to drop down to 94.1 percent in 2020 from 98.8 percent in 2019 thanks to the decline in claims frequency from March through June. That would mark the industry’s lowest combined ratio in at least the past two decades, the report noted. Private auto liability direct premiums written fell by 4.3 percent in the second quarter—the largest year-over-year decline in the last 19 years.

For commercial auto, a full-year 2020 combined ratio of just under 104 percent is expected, down from 109.4 percent in 2019. This would make 2020 the 10th-straight year of unprofitable underwriting in the line, according to S&P Global Market Intelligence, though it would be the most favorable outcome since 2014. Commercial auto liability saw a 5.9 percent decline in direct premiums written in the second quarter on a year-over-year basis—the first such decline since the opening three months of 2011, the report noted.

The premium rebates and discounts extended to private auto policyholders due to the coronavirus pandemic will serve as a drag on premium growth in 2021, S&P Global Market Intelligence predicted.