The U.S. property and casualty insurance industry improved its underwriting results in 2024 despite “significant” insured catastrophe losses, reducing its net underwriting loss to an estimated $2.6 billion, according to a recent report from AM Best.
Despite the net loss expected, 2024’s results mark a “steep improvement” from the more than $24 billion underwriting loss in 2023, AM Best commented. It bodes well for continued improvement in 2025 as the industry “marches toward rate adequacy,” the ratings firm said.
“On a net basis, both the homeowners multiperil and private passenger auto businesses generated more favorable loss ratios through year-end, reflecting the aggressive push for rate adequacy among primary personal lines insurers since early 2022,” said Greg Williams, managing director of AM Best, in a statement.
Across all lines, insurers are estimated to have grown net premiums written by 10% in 2024, with personal lines premiums rising 12.9% and commercial lines up 6.1%. AM Best said it expects an increase of 7.3% in net premiums written for the P&C market in 2025.
“Insurers are more determined than ever to achieve the rate increases necessary to address their calculated rate needs, particularly for the lines of coverage such as private passenger auto and homeowners multiperil,” Williams said.
The personal lines sector is expected to produce a net underwriting loss of $11.9 billion for 2024, AM Best said, well below the$36.7 billion loss from 2023. Catastrophes added 9.5 percentage points to the sector’s combined ratio, ending out the year at 101%.
Homeowners insurance, beset by the “ongoing impact” of natural disasters, will likely post a combined ratio of 105.7% for 2024, down from 110.9% in 2023.
“As the potential for frequency and severity of weather-related losses increases, the cost of homeowners insurance is likely to remain elevated,” the ratings firm commented.
The personal auto segment, on the other hand, improved its combined ratio from 104.9% in 2023 to 98.7% due to persistent rate increases.
“After three years of net underwriting losses, the private passenger auto segment’s efforts started to bear fruit in 2024,” said AM Best in the report.
“Companies focused on more adequate rates and effective pricing, risk selection, and overall portfolio management practices to improve results. Because this line accounts for a third of all the P&C industry’s annual direct premium and more than a half of personal lines premium, its results—whether positive or negative—have a material impact on the P&C industry’s overall results.”
Commercial lines
also saw a boost from positive rates, with an expected 97% combined ratio for the sector. The sub-100 result is despite commercial auto’s projected combined ratio for 2024 of 108.5% and commercial multi-peril at 104.5%.
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