Premium growth remains above historical levels. (Credit: Nuthawut/Adobe Stock)
The U.S. property and casualty industry improved its underwriting and earnings performance last year, according to a new report from Fitch Ratings.
Even with large catastrophe losses, the industry achieved a 96.6% combined ratio, down 5.2 percentage points from 2023. The combined ratio is a measure of insurer profitability: anything below 100% indicates a profit, while anything above 100% indicates an underwriting loss.
“The P&C industry returned to underwriting profitability in 2024, with a significant earnings improvement following two years with a combined ratio over 100% and below-average return on surplus,” said Tana Marcom, senior director at Fitch Ratings, in a statement.
Premium growth remains above historical levels. Personal lines premium growth has been strong due to large underwriting losses over the past several years. Commercial lines premiums are growing but starting to moderate.
Fitch expects higher auto and home insurance claims in 2025 due to the inflationary effects of tariffs, which will cut into personal lines performance. Weaker economic growth due to a trade war could also reduce demand for commercial lines.
Cyber insurance was profitable in 2024, but direct written premiums fell for the second year in a row. Carriers are struggling to maintain underwriting discipline as more competitors enter the market. Technological changes, particularly artificial intelligence, are also creating challenges, as coverage must evolve and adapt. Fitch expects cyber insurance to experience periods of volatility going forward.
Directors and Officers (D&O) insurance saw strong results in 2024, but premium revenues are declining, and the segment is experiencing underwriting challenges related to litigation activity and settlement trends.
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