MALVERN, PA — The U.S. property/casualty (P/C) insurance industry achieved its strongest underwriting results in more than a decade in 2024, closing the year with a net combined ratio (NCR) of 96.6. This marks a 5.1-point year-over-year improvement and the industry’s best performance since 2013, according to a new report from the Insurance Information Institute (Triple-I) and Milliman. Yet, emerging challenges in 2025, including the economic impact of tariffs and January’s devastating wildfires in California, could temper this momentum.
2024 Performance Highlights
- Improved Profitability Across Segments: Both personal and commercial lines reported net combined ratios under 100, with personal lines narrowing the gap.
- Personal Auto Surge: The personal auto NCR improved to 95.3, a 9.6-point year-over-year jump, supported by robust net written premium (NWP) growth of 12.8% in 2024.
- Homeowners’ First Positive Year Since 2019: Homeowners closed the year with an NCR of 99.7, an 11.2-point improvement, and an NWP growth rate of 13.6%, the highest in over 15 years.
However, not all lines performed equally. General liability logged its weakest performance since 2016, marked by reserve strengthening in 2024. “The 2024 net combined ratio of 110 included a staggering nine points of adverse prior year development, amounting to more than $9 billion in reserve strengthening,” said Jason B. Kurtz, principal and consulting actuary at Milliman.
Challenges Ahead in 2025
- California Wildfires: The January 2025 wildfires in Los Angeles County are expected to deliver the industry’s worst Q1 underwriting performance in more than 15 years.
- Tariffs and Economic Pressures: The expansion of tariffs is negatively affecting growth and replacement costs, with early impacts appearing in personal and commercial auto, and commercial property lines.
- Potential Contraction: Property/casualty economic growth is projected at 5% for 2025, outperforming U.S. GDP growth of 2.5%. However, Chief Economist Michel Léonard warned of slower momentum. “These headwinds may lead to a contraction later in the year that could exceed the overall GDP slowdown.”
Looking Ahead
Despite these difficulties, the industry remains well-positioned. For workers’ compensation, 2024 marked the eighth consecutive year of double-digit favorable prior year development, bolstering financial health. Donna Glenn of the National Council on Compensation Insurance noted, “The workers’ compensation system continues an era of exceptional performance, with strong results and a financially healthy line.”
Governor Shapiro’s administration plans to mitigate pressure on the sector with infrastructure enhancements and further investment in public lands, seeking to sustain growth in key consumer-driven industries.
While the P/C insurance industry heads into a challenging year, its consistent performance in 2024 demonstrates the resilience of the market even against external pressures. Whether this stability holds in 2025 depends on the sector’s ability to manage economic headwinds and maintain its profitability amid uncertainty.
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