MALVERN, PA — The U.S. property/casualty (P/C) insurance sector entered 2025 on uneven footing, with optimism in personal auto offset by ongoing challenges in homeowners and general liability lines, according to the latest joint report from the Insurance Information Institute (Triple-I) and Milliman.
Personal auto remains a relative bright spot. The net combined ratio (NCR) for this segment is projected at 96.0 for 2025, signaling continued profitability despite a slight rise from last year. In contrast, homeowners insurance suffered its worst first-quarter loss ratio in over 15 years, driven largely by the devastating Los Angeles wildfires in January.
General liability also remains under pressure, recording its second-worst first-quarter loss ratio in more than a decade. Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman, warned that while the NCR is expected to improve between 2026 and 2027, “it is worrisome that the first quarter 2025 direct incurred loss ratio was only marginally improved relative to the first quarter of 2024, and that these two results are the highest first quarter loss ratios in more than 15 years.” However, he added on a more optimistic note that “premium growth does appear to be picking up.”
On the economic front, Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I, highlighted the broader resilience of the U.S. economy and insurance sector, stating, “The U.S. economy and P/C industry have been resilient in the face of tariffs and trade uncertainty. The insurance industry’s economic growth drivers continue to outperform overall U.S. GDP growth.”
Yet Léonard cautioned that updated economic data could reveal a softer outlook. “As revised economic data for the first half of the year becomes available this summer, a weaker picture of the U.S. economy may emerge, and concerns over contraction or even recession could become more widespread heading into the fall,” he said. He further noted that “with inventories running low, their depletion will now accelerate inflation and slow growth for the rest of the year.”
Commercial auto is expected to remain unprofitable through at least 2027, despite an ongoing double-digit net written premium growth estimate for 2025. Meanwhile, workers’ compensation offers a bright spot for the industry. Its NCR for 2025 is forecast at 90.6 — a one-point improvement over previous estimates — supported by the lowest first-quarter loss ratio in more than 15 years.
Stephen Cooper, executive director and senior economist at the National Council on Compensation Insurance (NCCI), highlighted the labor market’s role in this segment’s strength. “With economic uncertainty elevated and recession concerns resurfacing, consumer behavior will be important to watch,” he said. “While employment has been concentrated amongst fewer industries, the labor market has shown resilience and continued strong payroll growth for workers’ compensation.”
Overall, the industry’s net written premium growth is forecast at 6.8% for 2025, down from 8.8% in 2024 and the lowest since 2020. The overall NCR is projected to rise to 99.3, reflecting ongoing profitability pressures.
As economic uncertainty lingers and severe weather and inflation continue to impact losses, insurers are bracing for a dynamic year ahead, with segments like personal auto and workers’ compensation offering cautious optimism amid broader challenges.
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