U.S. Property and Casualty Insurance Sector Reports Best Performance in Decade
The U.S. property and casualty insurance sector experienced notable financial success in 2025, marking its best performance in a decade, as revealed by a recent AM Best report. This achievement was primarily driven by improved underwriting results and persistent pricing strategies.
The report, released on July 15, 2026, detailed that the industry achieved $84 billion in underwriting gains over the past two years. This reflects a substantial improvement from the $51 billion in losses recorded between 2021 and 2023. Sector-wide initiatives that began in 2024 led to $45 billion in gains, sustained through 2025, despite significant losses from early-year wildfires in Los Angeles.
Significant improvements were noted across major insurance lines, with substantial gains in personal and commercial segments. Underwriting profits in personal lines nearly quadrupled to exceed $45 billion, while profits in commercial lines more than doubled, surpassing $19 billion. Furthermore, private passenger auto insurers rebounded from challenging times, with combined ratios falling below 100 in both 2024 and 2025, marking a return to profitability.
Insights from AM Best
David Blades, AM Best Associate Director, emphasized that insurers providing personal auto and homeowners insurance have benefited from advancements in technology and data analytics in operational areas. He also noted that robust rate momentum initiated in 2024 continued through 2025, enhancing net earned premiums and overall performance.
The findings are based on financial statements aggregated by AM Best, encompassing entities with reported NAIC Insurance Expense Exhibit data as of June 2, 2026. Commercial lines insurers have maintained consistent underwriting profits over the five-year period examined in the report, buffered by sound underwriting practices, strong pricing, favorable investment returns, and sufficient reserves.
Challenges in Commercial Liability
Despite these gains, individual commercial lines still face disparities. Christopher Graham, a senior analyst at AM Best, highlighted challenges in casualty lines, particularly commercial auto liability and other liability (occurrence), which are beset by adverse reserve development and worsening claims severity. Furthermore, commercial liability insurers face ongoing challenges due to claim trends influenced by social inflation, aggressive litigation practices, third-party funding, increased settlement costs, and larger jury verdicts.
While the P/C sector shows significant underwriting improvement, AM Best stresses the importance of monitoring claim severity and maintaining adequate reserves in commercial liability lines to ensure continued success.