Overview
The US property and casualty insurance industry is on track for its lowest net combined ratio in more than a decade for full-year 2025, even after absorbing heavy losses from California wildfires early in the year. The result hinges on a mild Atlantic hurricane season that never reached the US coastline.
The outlook comes from Insurance Economics and Underwriting Projections: A Forward View, a joint report by the Insurance Information Institute and Milliman.
The analysis said insurers held up through regional catastrophe losses, tariffs, and rising geopolitical noise.
Key Highlights
- The collection of economic data was impacted by the U.S. government shutdown in Q4 2025, leading to data delays and gaps. Available economic data points to P&C underlying growth slowing, particularly for premium volume. Additionally, political and geopolitical risks are increasing.
- P/C Aggregate Net Premium Growth across all P&C lines for 2025 is expected to be 5.9%, further slowing relative to 2024’s growth rate.
- Homeowners’ 2025 Net Combined Ratio is forecast at 99.6 points, on par with 2024 despite losses from the Los Angeles fires in Q1 2025
- Personal Auto’s 2025 Net Combined Ratio is forecast at 94.4 points, an improvement from 2024, while Net Written Premium Growth is expected to have slowed to 3.6%, the lowest level since 2020.
- General Liability and Commercial Auto are the only major lines forecast to remain above a Net Combined Ratio of 100 points, though gradual improvements are expected for both lines in 2026–2027.
- Workers’ Compensation continues to perform strongly, with Net Combined Ratios forecast to range from high 80s to low 90s in 2025-2027.
Global P&C insurance pricing decline as market shifts toward softer cycles. Global insurance market drifting into a progressively softer setting, with pricing momentum slipping across most European and US P&C insurance lines.
GDP growth surprised on the upside in the third quarter
Michel Leonard, chief economist and data scientist at Triple-I, said the industry and the broader US economy stayed stable through 2025. He warned the underlying picture looks more fragile as economic and political uncertainty builds.
Overall, the P&C insurance industry and the broader U.S. economy remain stable. However, despite stronger-than-expected GDP growth in the third quarter, a closer look at the data suggests the U.S. economy may be increasingly vulnerable to rising economic, political, and geopolitical uncertainty.
Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I
In particular, P&C replacement costs could still see significant increases in 2026, weighing on overall P/C performance (see TOP 100 P&C Insurance Companies).
Leonard said replacement costs across P&C insurance lines still face upward pressure in 2026, a factor that could weigh on results.
He added that unemployment drifting toward the 5% mark over the next six months raises the odds of an economic contraction. It isn’t a base case, but it’s on the radar.
We’re on track to achieve the lowest Net Combined Ratio in over a decade, thanks in part to a hurricane season that spared the U.S. and strong homeowners performance, even after the Los Angeles fires in Q1 2025
Patrick Schmid, Ph.D., chief insurance officer at Triple-I
US commercial lines insurers turned in another solid stretch through the first three quarters of 2025, with composite combined ratios holding in the mid-90% range and operating ratios settling in the low-to-mid-80s.
Those numbers, helped by investment income on large reserve bases, delivered returns on capital near 10%. That’s a marked improvement compared with the prior three years, when volatility and reserve strain kept results from stabilising.
Under the surface, though, the picture shifts line by line. Workers’ comp insurance continues to carry the segment, sitting near a 90% combined ratio for five straight years thanks to steady favourable reserve development and low claims frequency.
Profitability peaked in 2025. Revenue growth cooled
Aggregate net written premium growth across all P&C lines is projected at 5.9%, a slower pace than in 2024.
Homeowners coverage holds steady. The 2025 net combined ratio is forecast at 99.6, matching 2024 despite losses tied to the January Los Angeles fires.
Wildfires in Los Angeles in January 2025 drove significant losses, resulting in the worst first-quarter loss ratio for homeowners in over 15 years and the worst quarterly result since Q2 2011.
US insurance premium growth by line, 2025
| Line of business | NWP growth | Notes |
| Aggregate P&C | 5.9% | Cooling trend |
| Personal auto | 3.6% | Lowest since 2020 |
| General liability | 6.8% | Not keeping pace with losses |
| Personal lines vs commercial | +1.5 pts | Gap narrows by 2027 |
P&C insurance underlying economic growth is expected to remain above overall GDP growth in 2025 (2.3% versus 2.1%) and 2026 (2.6% versus 2%) as lower interest rates continue to revive real estate and contribute to higher volume for homeowners’ insurance and commercial property, Beinsure noted.
This is an improvement on our 2025 P&C underlying growth expectations from second half of 2024. The pace of increase in P&C replacement costs is expected to overtake overall inflation in 2025 (3.3% versus 2.5%).
This aligns with our earlier expectations from the second half of last year.
Below are insights into the US insurance market rates. U.S. property insurance rates dropped 4%, a sharper decline than the 1% recorded in the previous quarter.
US P&C industry overview, full-year forecast
| Metric | Forecast | Context |
| Net combined ratio (NCR) | Lowest in 10+ years | Driven by quiet hurricane season |
| Aggregate NWP growth | 5.9% | Slower than 2024 |
| GDP growth (Q3) | Above expectations | Macro stability, rising fragility |
| Underlying P&C growth | 2.3% | Slightly above GDP |
| Replacement cost inflation | 3.3% | Above CPI |
Increased insurer capacity, driven by strong financial results over the past three years, contributed to the trend. Casualty insurance rates rose 7%, with an 11% increase when excluding workers’ compensation.
Commercial property insurance also keeps trending in the right direction, finishing 2024 with an 88% combined ratio and proving far less exposed to catastrophe losses than homeowners carriers.
Capacity has been stronger, reinsurance pricing less punishing, and underwriting discipline generally intact, Beinsure noted.
Net combined ratio by major P&C line
| Line of business | 2025 NCR | Trend vs 2024 | Commentary |
| Homeowners | 99.6 | Flat | LA wildfire losses offset by pricing |
| Personal auto | 94.4 | Improved | Strong underwriting gains |
| General liability | >100 | Flat to worse | Loss severity pressure |
| Commercial auto | >100 | Gradual improvement | Social inflation persists |
| Workers’ compensation | High 80s–low 90s | Stable | Favourable reserve development |
- Fitch Ratings assigns a neutral outlook to the U.S. property and casualty insurance sector for 2026, covering both commercial and personal lines.
- S&P Global forecasts a combined ratio of 99.2% in 2025, following a significant improvement in 2024. However, growth is expected to slow due to reduced premiums and catastrophe risk.
The view rests on expectations that strong statutory performance in 2025 carries forward, helped by a quiet hurricane season, unusually large favorable reserve development, and robust personal auto results.
Those tailwinds did a lot of the work. The U.S. P&C insurance sector is projected to remain profitable through 2026, driven by strong performance in private auto underwriting.
Personal auto insurance keeps improving
Growth in personal lines premiums remains solid, and the narrowing gap between personal and commercial lines performance points to a cautiously optimistic outlook for the industry (see US Auto Insurance Rates in 2026).
The 2025 net combined ratio is expected to fall to 94.4. Premium growth slows to 3.6%, the weakest showing since 2020, as pricing momentum fades.
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.
Catastrophe and insurance market drivers
| Factor | 2025 impact | Implication |
| Atlantic hurricanes | Minimal | Major earnings tailwind |
| California wildfires | Severe Q1 | Worst homeowners Q1 in 15 years |
| Reinsurance pricing | Easing | Capacity recovery |
| Insurer capital | Strong | Supports rate moderation |
Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, added, “General Liability faces continued challenges. Our 2025 Net Combined Ratio is forecast to be similar to 2024, among the worst in over a decade. Losses are high, with Q3 direct incurred loss ratios being the highest in at least 25 years,” he said.
While conditions may improve in 2026-2027, profitability remains a hurdle. Our General Liability’s NCR expectations have risen following a challenging Q3, reflecting ongoing pressure in the segment.
While some coverages are experiencing soft market conditions, aggregate premiums have been growing, but not enough to keep pace with loss trends. “We anticipate additional premium growth will be needed to improve General Liability profitability,” Kurtz noted.
Pressure lingers in liability-driven insurance lines
General liability and commercial auto remain the only major segments projected above a 100 net combined ratio in 2025. Gradual improvement shows up in 2026 and 2027, though the climb looks slow.
The 2025 general liability loss ratio was the second-worst first quarter in more than 15 years, improving by less than 1 point compared to 2024 and signaling continued profitability concerns.
Net written premium growth for 2025 is forecast at 6.8%, down 2.0 points from 2024 and the lowest since 2020. Personal lines are expected to outpace commercial lines by 1.5 points in 2025, though the gap is projected to narrow by 2027.
General liability insurance stress indicators
| Indicator | Status |
| Q1 2025 loss ratio | 2nd worst in 15+ years |
| Q3 incurred loss ratio | Highest in 25+ years |
| 2024 combined ratio | ~120% |
| Primary pressure | Social inflation, severity |
Commercial insurance lines performance snapshot
| Metric | 2025 YTD |
| Composite combined ratio | Mid-90% |
| Operating ratio | Low-to-mid-80% |
| Return on capital | ~10% |
| Reserve development | Favourable |
Further premium growth and improved underwriting performance should continue in 2025 and 2026, provided geopolitical and economic conditions remain relatively stable, Beinsure noted.
It logged a combined ratio around 120% in 2024 after another round of adverse severity trends and prior-year deterioration. Social inflation pushed claim values higher across occurrence-based liability, excess and umbrella.
Workers’ compensation stays a bright spot
Net combined ratios are forecast in the high 80s to low 90s through 2027, backed by steady premiums, disciplined underwriting, and favourable prior-year development.
Workers’ compensation tells a different story. Donna Glenn, chief actuary at NCCI, said loss ratios continue to trend down. Year-over-year declines appear modest, but consistent.
NCCI’s latest loss ratio trends continue to show declines. In the current environment, modest year-to-year decreases are still expected.
Glenn noted that “while there have been a few rate increases filed in NCCI states, every state has its own story, and based on the latest data, NCCI does not anticipate any imminent reversal of current trends.
Workers’ compensation outlook
| Metric | Outlook |
| NCR (2025–2027) | High 80s to low 90s |
| Loss ratio trend | Declining |
| Rate activity | Selective increases |
| Reserve development | Positive |
Glenn said some states filed rate increases, though trends vary widely by jurisdiction. Based on current data, NCCI doesn’t see an imminent reversal in workers’ compensation performance.
FAQ
The improvement comes despite heavy California wildfire losses in Q1 2025. A mild Atlantic hurricane season that avoided US landfall removed the single largest catastrophe swing factor. Strong personal auto results, steady homeowners performance, and favourable reserve development did the rest.
Los Angeles wildfires in January 2025 drove the worst Q1 homeowners loss ratio in more than 15 years and the weakest quarterly result since Q2 2011. Even so, the full-year homeowners net combined ratio is forecast at 99.6, matching 2024. Rate momentum, prior underwriting discipline, and limited catastrophe follow-through kept annual results intact.
Growth cooled. Aggregate net written premium growth for 2025 is projected at 5.9%, slower than 2024. Personal lines still lead, though by a narrower margin. Net written premium growth for personal auto slowed to 3.6%, the weakest pace since 2020, as rate increases tapered after sharp gains in prior years.
General liability and commercial auto remain the only major lines above a 100 net combined ratio in 2025. General liability stands out. Q1 2025 delivered the second-worst first-quarter loss ratio in over 15 years. Social inflation, large verdicts, and adverse prior-year development keep profitability strained. Even with premium growth near 6.8%, losses outpace pricing.
Workers’ compensation continues to anchor results. Net combined ratios are forecast in the high 80s to low 90s through 2027. Low claims frequency, steady exposure, and favourable prior-year reserve development drive performance. NCCI data shows loss ratios still declining, with no near-term reversal expected.
Michel Leonard, chief economist at Triple-I, flagged rising vulnerability despite solid GDP growth in Q3. Replacement costs across P&C lines are expected to rise faster than inflation in 2026. Unemployment drifting toward 5% over the next six months raises downside economic risk. Political uncertainty and geopolitical friction add volatility.
Fitch Ratings assigns a neutral outlook for 2026, citing strong statutory results, a quiet hurricane season, and robust personal auto underwriting. S&P Global Ratings forecasts a 99.2% combined ratio for 2025, with profitability extending into 2026. Growth slows, but underwriting discipline and reserve strength keep the sector in positive territory.
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AUTHOR: Michel Leonard, Ph.D., CBE, chief economist and data scientist at Triple-I, Patrick Schmid, Ph.D., chief insurance officer at Triple-I, Jason Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, Donna Glenn, chief actuary at NCCI
Edited by Nataly Kramer – Lead Insurance Editor at Beinsure
