The US property and casualty insurance industry entered 2024 under continued financial pressure following two years of notable underwriting losses. Factors contributing to the negative results included elevated catastrophe losses, economic inflation affecting claims costs, and a reinsurance market that remained firm across multiple lines.
Among the most impacted were the personal lines segments – private passenger auto and homeowners insurance – which have been especially sensitive to recurring losses from secondary perils.
Unlike hurricanes, which generally affect coastal regions, secondary perils such as hail, wind, and wildfires occur across a broader range of geographies and continued to drive loss severity across homeowners policies.
That said, the year ultimately marked a shift in profitability for the industry. According to AM Best, the P&C sector recorded its first underwriting profit since 2020, with net underwriting gains reaching $22.9 billion. This was a notable reversal from the underwriting losses that had dominated the previous two years.
The industry also crossed a significant threshold by exceeding $1 trillion in direct premiums written (DPW) for the first time. The recovery was led by personal lines, particularly private passenger auto insurers, who posted a $14 billion underwriting profit after sustaining a $17 billion loss in 2023.
This $31 billion improvement helped push the entire P&C industry to an underwriting profit of over $21 billion in 2024, a $44 billion turnaround from the prior year. Homeowners and farmowners insurers also contributed, narrowing their underwriting loss to $2.1 billion from nearly $16 billion in 2023.
The auto insurance sector’s recovery followed multiple years of losses totaling approximately $50 billion across 2022 and 2023. Insurers responded by seeking rate increases to align with rising costs linked to inflation, more aggressive post-pandemic driving behavior, and increasing vehicle fatality rates.
In many cases, however, rate filings faced resistance from state regulators, leading to delays or lower-than-requested approvals. As a result, many carriers were left recalibrating pricing models to reach adequate rate levels.
According to AM Best, the gains seen in private passenger auto were also supported by advances in underwriting and pricing through expanded use of technology and analytics.
Severe convective storms, in combination with Atlantic hurricanes, continued to affect P&C results in 2024. The hurricane season produced 12 named storms between early September and Nov. 30, with seven hurricanes forming after Sept. 25 – a record for that period.
Despite the storm activity, underwriters in the homeowners and farmowners market saw relative improvement. Though the segment still recorded a fifth consecutive underwriting loss, the reduced deficit marked notable progress for the line.
Broader metrics support the improvement across the industry. The combined ratio for the overall US P&C market fell to 96.6 in 2024, a 5.1-point improvement over the prior year and the best underwriting result since 2013, according to research by the Insurance Information Institute and Milliman.
On the commercial side, many lines remained profitable in 2024. Workers’ compensation and other liability (claims-made) maintained underwriting profitability, although margins were narrower compared to previous years. Commercial property lines posted stronger results, benefiting from pricing momentum and underwriting discipline.
One commercial segment that moved in a less favorable direction was other liability (occurrence), which includes umbrella and excess liability products. AM Best attributes the decline in this line’s performance to the rising severity of commercial auto claims, which has increased the cost burden on excess layers.
Insurers in this space have responded with higher rates, but underwriting results suggest that recent pricing actions may not have fully caught up to the underlying risk.
The combination of these factors marked 2024 as a pivotal year for the US P&C insurance market, with key segments regaining stability after a multi-year stretch of adverse performance.
AM Best’s analysis suggests that while challenges remain, particularly from weather and litigation trends, the industry’s response through pricing, technology, and capital strategies has reshaped its near-term outlook.
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