Verisk and the American Property Casualty Insurance Association (APCIA) reported that the US property and casualty (P&C) insurance industry generated an estimated $170 billion in net income for full-year 2024.
Excluding over $70 billion in capital gains realized by a single insurer, adjusted net income is estimated at $100 billion.
The industry recorded an underwriting gain of $24.8 billion for the year, reversing an underwriting loss in 2023. This marked the first full-year underwriting gain since 2020.
Verisk and APCIA attributed the turnaround primarily to premium increases aligning more closely with the risk environment.
Saurabh Khemka (pictured above), co-president of underwriting solutions at Verisk, said that while several loss drivers from 2023 continued into 2024, the industry benefited from pricing adjustments.
According to Khemka, 2024 was the second costliest year for catastrophe losses since 1950, with hurricanes and convective storms as primary contributors. Hurricane Milton and several late-season events drove catastrophe claims in the fourth quarter up 113% compared to the same period in 2023.
In 2023, the US P&C insurance sector recorded a net underwriting loss of $21.2 billion, a slight improvement from the previous year's $24.9 billion loss. This period also saw the worst underwriting loss in a decade, primarily due to severe weather-related losses, persistent inflation, and rising reinsurance costs.
Severe weather events, including hurricanes and wildfires, led to substantial insured losses, impacting profitability. Rising costs of claims due to inflationary pressures also affected underwriting results.
Total written premiums for the year reached $926 billion, up from $851 billion in 2023. Earned premiums rose 9.8% to $895 billion, a slight increase over the 9.7% growth reported in the previous year.
Incurred losses and loss adjustment expenses increased by 1.9%, a reduction from the 10.1% rise recorded in 2023. The industry's combined ratio improved to 96.4% in 2024, compared to 101.6% in 2023. Policyholders' surplus grew from $1.013 trillion at year-end 2023 to $1.082 trillion by the end of 2024.
Robert Gordon, senior vice president for policy, research, and international at APCIA, said the industry saw a notable shift from an underwriting loss in 2023 to a gain in 2024.
However, Gordon said homeowners insurers are likely to report seven consecutive years of underwriting losses by the end of 2025, citing major events such as the California wildfires in January.
In the second half of 2024, the industry reported a net underwriting gain of $21 billion, compared to $3.8 billion in the first half and $1.7 billion in the same period of 2023. Hurricanes Helene and Milton significantly impacted catastrophe claims in the third and fourth quarters, though overall results improved.
Net written premiums rose by $29.8 billion in the second half, a 6.9% increase year over year. The combined ratio improved to 95.3, down from 99.1 in the second half of 2023.
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