U.S. P/C Insurance Industry Sees Best Underwriting Since 2013 but Faces 2025 Challenges

The U.S. property/casualty (P/C) insurance industry reported a net combined ratio (NCR) of 96.6 for 2024, marking a 5.1-point improvement from the previous year and achieving the best underwriting performance since 2013.

This improvement reflects stronger underwriting results despite ongoing economic pressures. However, emerging challenges threaten to affect the industry's positive trajectory in 2025, notably losses from the January California wildfires and the economic impact of expanded tariffs. The P/C sector's economic growth rate is forecasted to remain robust at 5% for 2025, outpacing the overall U.S. GDP growth of 2.5%.

Replacement cost inflation for P/C insurers is expected to rise 1.0%, slower than the broader U.S. Consumer Price Index (CPI) increase of 2.0%, although this trend may reverse due to tariff-related pressures leading to accelerated replacement costs.

Commercial auto and general liability lines saw adverse prior year development (PYD), particularly in general liability where significant reserve strengthening added approximately $9 billion in reserves, contributing to a net combined ratio of 110 for 2024.

Workers' compensation lines delivered strong results with favorable PYD for the eighth consecutive year, indicating a financially healthy segment. Despite these recent gains, the industry faces potential headwinds from macroeconomic factors and catastrophe losses that could weigh on underwriting profitability and slow growth momentum in 2025.