“The one commercial line that swung most decidedly in a negative direction was other liability occurrence, which AM Best believes includes the preponderance of umbrella and excess liability coverage,” says Christopher Graham, senior industry research analyst, Industry Research and Analytics, AM Best. “Insurers of these coverages have pushed to achieve pricing levels more indicative of recent loss trends, with larger commercial auto losses having a negative impact on umbrella and excess lines’ profitability.” (Illustration credit: ShinneProject/Adobe Stock)
The U.S. property and casualty (P&C) insurance sector experienced a significant turnaround in 2024 and achieved a net underwriting gain of $22 billion, according to fresh reporting from AM Best.
This is a stark contrast to the $23 billion underwriting loss the industry faced in 2023.
The improvement was largely driven by a $31 billion rebound in personal auto insurance, says the new Best’s Special Report titled "2024 P/C Snapshot: Personal Lines Results Propel Turnaround in Underwriting Performance; Premiums Exceed $1 Trillion."
“Persistent efforts to improve rate adequacy, combined with the benefits of the continued leveraging of technology and data analytics to supplement underwriting, claims handling and ratemaking finally bore fruit in 2024,” David Blades, associate director of Industry Research & Analytics for AM Best, said in a press release about the report. “However, considering the losses from the devastating California wildfires, it’s highly questionable whether at least the homeowners’ underwriting performance from 2024 can be sustained in 2025.”
The personal auto line had been a major source of underwriting losses for years, with the line posting losses for three consecutive years prior to 2024. In contrast, the homeowners/farmowners line of business still experienced an underwriting loss in 2024, but the $2.1 billion loss represented a significant improvement from the $16 billion loss seen in 2023.
The report also highlights how the P&C industry exceeded $1 trillion in direct premiums written for the first time in 2024.
In addition to the personal auto line, the commercial property line also saw a notable improvement in its underwriting results, with the segment generating an $8.1 billion net underwriting gain in 2024. This is a significant turnaround from the $1.9 billion loss the line experienced in 2023.
The report attributes the improvement in the commercial property line to the ongoing efforts by insurers to address rate adequacy and risk selection.
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