The U.S. property&casualty (P&C) market in 2024 is expected to show improved underwriting results, according to the Insurance Economics and Underwriting Projections: A Forward View report from the Insurance Information Institute and Milliman. Beinsure analyzed the report and highlighted the key points.
Further premium growth and stronger underwriting performance are projected for 2025 and 2026, assuming geopolitical and economic stability.
Statutory underwriting performance in the U.S. property and casualty insurance industry saw strong revenue growth, a return to underwriting profits, and increased investment earnings in 2024. This combination drove statutory operating earnings to record levels, according to Fitch Ratings report.
Economics
P&C economic growth in 2024 ended slightly below U.S. GDP, at 2.3% versus 2.5% year-over-year (YOY). However, in 2025 and 2026, P&C growth is expected to outpace overall GDP, improving year-end expectations.
A notable milestone in 2024 was the U.S. insurance industry surpassing 3 mn employed individuals.
Underwriting
The 2024 P&C net combined ratio (NCR) is estimated at 99.5, a 2.2-point YOY improvement. Net written premium (NWP) is projected to grow 9.5% YOY. Personal lines NCR estimates improved by nearly 1 point due to stronger-than-expected Q3 performance in personal auto.
Commercial lines NCR increased by 1.2 points, affected by commercial property and general liability. Personal lines NWP growth is expected to outpace commercial lines by 9 points in 2024 (see Best U.S. P&C Insurers in 2025).
P&C Industry Underwriting and Income Highlights
| 2024 | % chg | |
| Net Written Premiums | 461.8 | 10.5% |
| Underwriting Gain Incl Policy Divs | 3.6 | -115.0% |
| Investment Income | 41.8 | 24.8% |
| Realized Investment Gains | 58.3 | 2458.6% |
| Operating Income | 38.2 | 475.4% |
| Net Income | 96.5 | 981.5% |
| Adjusted Net Income | 41.2 | 362% |
| Policyholders’ Surplus | 1,089.8 | 5.3% |
Premium growth remained strong, with direct written premiums (DWP) up 11% and net written premiums up 10% year-over-year in 2024. Significant rate increases in auto and homeowners’ insurance led to a 15% rise in personal lines DWP.
Meanwhile, commercial lines DWP growth continued to moderate, increasing by roughly 5% for the period.
P&C Industry Performance Highlights
| 2024 | Change | |
| Loss Ratio | 72.4% | -6.3% |
| Expense Ratio | 24.9% | -0.4% |
| Dividend Ratio | 0.3% | 0.0% |
| Combined Ratio | 97.6% | -6.8% |
| Annualized Operating Return on Surplus | 7.2% | 5.9% |
Personal Lines
The 2024 personal auto NCR is projected at 98.8, a 6.1-point improvement over 2023. Personal auto NWP growth of 14.0% is the second highest in over 15 years. Homeowners insurance NCR is expected at 104.8, also a 6.1-point YOY improvement, despite an active hurricane season.
Commercial Lines
The commercial property NCR is projected at 91.2, worsening by 3.3 points from 2023. Hurricane Milton is expected to be the most severe commercial property catastrophe since Hurricane Ian in Q3 2022. General liability NCR is projected at 103.7, worsening by 3.6 points from 2023.
P&C growth should continue to outpace GDP in 2025 (2.3% vs. 2.1%) and 2026 (2.6% vs. 2.0%). Lower interest rates are expected to boost real estate activity, increasing volume for homeowners’ and commercial property insurance.
This represents an improvement in our 2025 expectations compared to late 2024. P&C replacement costs are projected to outpace inflation in 2025 (3.3% vs. 2.5%), consistent with earlier forecasts.
Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I
While commercial lines continue to outperform personal lines, the gap is narrowing.
The commercial P&C insurance lines sector maintained a stronger position than personal lines, with a 54.5% direct loss ratio in 2024 compared to 56.5% in the prior year.
This improvement was driven by better results in commercial property and multi-peril underwriting, with workers’ compensation remaining highly profitable.
The overall economic toll in 2024 was not record-setting, but it further reinforced the vulnerabilities the world continues to face from costlier ‘non-peak’ peril occurrences affecting large population centers. High-loss events in Latin America and the Middle East ended in the top ten.
Natural catastrophes like Hurricane Helene in Q3 and Hurricane Milton in Q4 significantly impacted commercial property. The substantial rate hikes needed to counter inflationary loss pressures have improved results in personal auto and homeowners.
In 2024, global natural perils resulted in total direct economic costs of $417 bn. Of this, $154 bn was covered by private insurers and public insurance entities. From 2017 to 2024, insurers faced an average annual loss of $146 bn from natural catastrophes, indicating a “new normal” near $150 bn annually.
Commercial auto remains unprofitable. The 2024 direct incurred loss ratio through Q3 is only slightly better than 2023 and is the second highest in over 15 years.
Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman
General liability has also deteriorated, with each 2024 quarterly loss ratio worse than 2023 YOY.
The 2024 direct incurred loss ratio through Q3 is the highest in over 15 years. As a result, we have increased expectations for 2025 and 2026 NWP growth as the industry reacts to worsening 2024 results.
U.S. general liability loss ratios have worsened since before 2019.
A major driver has been the emergence of heightened social inflation, specifically legal system abuse and nuclear verdicts. If these trends persist, reserves for this class will likely continue deteriorating.
Emma Stewart, FIA, chief actuary for Market Reserving and Capital at Lloyd’s
Workers’ Compensation
The 2025 average loss cost decrease of 6% is moderate and will impact overall NWP changes. This is a shift from 2024, which saw an average loss cost decrease of over 9%, the largest drop since before the pandemic.
Payroll development in 2025 will be influenced by wage and employment levels, with overall premium trends becoming clearer as the year progresses.
Workers’ compensation rates in Washington will rise by 3.8% in 2025, as reported by the Washington State Department of Labor and Industries (L&I). The increase stems from factors such as wage growth, according to BestWire.
L&I noted that a 5.5% average increase would have been required to meet its break-even point but plans to use reserves to cover the shortfall. On average, this rate hike will add $52.50 per employee annually.
Between 2012 and 2023, the state’s average wage consistently outpaced workers’ comp premium hikes, except in 2022 when wages rose 2%, compared to a 3.1% hourly rate increase.
Employees contribute 24% of their workers’ comp premiums, a unique feature compared to other states. L&I stated that this portion would remain largely unchanged in 2025.
Rate adjustments consider factors such as expected benefit costs, reserve levels, wage and benefit inflation, operational costs, and investment returns. The 3.8% change represents an average; specific rates will vary based on industry classification and claims history.
FAQ
The industry saw improved underwriting results, a 10.5% NWP increase, and stronger revenue growth. The NCR improved to 99.5, and investment income surged by 24.8%.
Continued premium growth, improved underwriting performance, and economic conditions supporting P&C growth above GDP rates (2.3% in 2025, 2.6% in 2026).
Stronger-than-expected Q3 2024 performance and significant rate increases contributed to a 6.1-point improvement in the NCR, with NWP growth of 14.0%.
Each 2024 quarterly loss ratio was higher than in 2023 due to legal system abuse and nuclear verdicts, leading to increased reserves for 2025 and 2026.
Hurricane Milton was the worst catastrophe since Hurricane Ian (2022), driving $154 bn in insured losses. Rising catastrophe costs continue to pressure commercial property lines.
The line remains unprofitable, with a direct incurred loss ratio through Q3 2024 at its second highest in over 15 years, showing only slight improvement over 2023.
Loss costs are expected to decrease by 6% in 2025, down from 9% in 2024. Payroll developments will influence premium trends, with rates varying by industry and claims history.
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AUTHORS: Michel Léonard – PhD, CBE, Chief Economist and Data Scientist at Triple-I, Dale Porfilio – FCAS, MAAA, Chief Insurance Officer of Triple-I, Jason B. Kurtz – FCAS, MAAA, a principal and consulting actuary at Milliman, Donna Glenn – Chief Actuary at the National Council on Compensation Insurance, Emma Stewart – FIA, chief actuary for Market Reserving and Capital at Lloyd’s
