US P&C Insurance Industry Posts Best Underwriting Results Since 2013 in 2024
The US property & casualty (P&C) insurance industry delivered its strongest underwriting performance since 2013, achieving a net combined ratio (NCR) of 96.6 in 2024, a 5.1-point improvement from the year prior. This improvement was driven primarily by gains in personal insurance lines, with both personal and commercial P&C segments posting NCRs under 100 indicative of broad underwriting profitability. Personal auto insurance demonstrated a notable turnaround with an NCR improvement of 9.6 points to 95.3, supported by net written premium (NWP) growth of 14.4% in 2023 and 12.8% in 2024. Similarly, homeowners insurance achieved its first sub-100 NCR since 2019 at 99.7, alongside a 13.6% increase in NWP, the strongest in over 15 years.
Despite these positive results, emerging challenges threaten the sector's momentum into 2025. Early pressures emerged from the January 2025 wildfires in Los Angeles County, expected to produce the industry's weakest first quarter in over 15 years. Additionally, the broadening impact of tariffs is contributing to rising replacement costs and slowing premium growth, affecting not only personal auto but also homeowners, renters, commercial auto, and commercial property insurance lines.
The commercial P&C segment continues to experience structural pressures, with general liability posting its weakest NCR since 2016 due to significant reserve strengthening. Adverse prior year development (PYD) remains a persistent challenge in general liability and commercial auto sectors, extending a negative trend over three consecutive years. Conversely, workers’ compensation insurance remains one of the more stable lines, benefitting from favorable PYD and maintaining strong financial footing.
Economically, the P&C sector's underlying growth rate is projected at 5% for 2025, exceeding the US GDP forecast of 2.5%. However, replacement cost inflation, initially expected to rise slower than overall inflation, may accelerate due to tariffs. This shift could dampen premium growth and exert additional pressure on underwriting profitability. The industry faces the prospect of slowing momentum and potential contraction later in 2025 as these economic headwinds combine with environmental losses.
Industry experts highlight the critical importance of managing reserve adequacy, particularly given the reported $9 billion in reserve strengthening in 2024, the highest in over 15 years. The hard market years from 2020 to 2023, despite rate increases, have still seen increasing reserves, signaling ongoing challenges in accurately forecasting loss developments. Overall, while the 2024 underwriting performance is a benchmark year, sustaining this success will depend on navigating evolving economic and environmental pressures effectively.