By Chad Hemenway

The U.S. property/casualty industry took another underwriting loss in 2024, but results improved thanks to rate increases and changes in risk selection, most notably in the personal lines sector.

A report from industry rating agency AM Best late last month said U.S. P/C insurers posted an underwriting loss of $2.6 billion in 2024oa large improvement over the underwriting loss of $24.6 billion recorded in 2023. The estimated combined ratio for 2024 was 98.9 compared to 101.9 for 2023.

AM Best said it expects the industry in 2025 to ìbuild on its solid reboundî with improved underwriting and operating resultsoeven in the face of more losses from secondary perils and continued adverse litigation trends such as social inflation and third-party litigation funding.

The personal lines segment will be a driver of expected improvement, AM Best said. In 2024, personal lines posted a net underwriting loss of $11.9 billion compared to a loss of $36.7 billion in 2023. Rate increases in auto and home insurance helped drive improvements in personal lines; the combined ratio for auto was 98.7 (from 104.9 in 2023) and homeowners was 105.7 (from 110.9 in 2023).

AM Best said personal lines premium increased 12.9% in 2024 and is projecting to increase 9% this year.

ìInsurers are focusing on achieving the rate increases necessary to address their calculated rate needs, particularly for lines of coverage such as private passenger auto and homeowners multiperil,î the agency said, adding that insurers are ìprepared to withdraw from a given state entirely if needed increases are not approved.î

The homeowners segment is still expected to record a slight underwriting loss in 2025, according to AM Best, but the achievements in 2024 in personal autooafter three years of underwriting lossesoshould continue as the line has made strides to achieve rate adequacy while effectively using technology and data analysis.

ìBecause this line [personal auto] accounts for a third of all the P/C industryis annual direct premium and more than half of personal lines premium, its resultsowhether positive or negativeohave a material impact on the P/C industryis overall results,î AM Best said, predicting a further reduction in combined ratio in 2025 for private passenger auto to 97.5 from 98.7 in 2024.

Though commercial lines outperformed personal lines with a 2024 combined ratio of 97, it was no thanks to commercial auto, which turned in a combined ratio of 108.5. AM Best said it has a negative outlook for commercial auto, general liability, and D&O.

ìAM Best estimates that commercial lines net premiums were up 6.1% in 2024, from 8.1% in 2023, reflecting continued price declines in workersi compensation as well as certain specialty casualty lines,î the agency reported. For 2025, AM Best said it expects growth to weaken to about 4% but the combined ratio should remain steady at 97.

Topics
USA
Profit Loss
Underwriting
Personal Auto
Market
Property Casualty