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After several years of steep premium increases, homeowners and auto insurance customers may be seeing signs of stabilization, according to a new report from AM Best.
The firm's insurance industry researchers found that approved rate increases for both homeowners and private passenger auto insurance moderated significantly in 2025, reflecting improved underwriting performance and a more balanced market environment.
For homeowners insurance, the average approved rate increase declined to 8.3 percent in 2025, down from the higher levels seen a year earlier. Auto insurance experienced an even sharper slowdown, with average approved increases falling to 3.7 percent, compared with 9.7 percent in 2024.
Industry analysts attribute the change to insurers regaining profitability after years of elevated claims costs, weather-related losses and inflationary pressures.
"The improvement experienced by U.S. homeowners' insurers has been driven by both aggressive rate increases and enhanced pricing sophistication in states that had been generating the most adverse results," said David Blades, associate director at AM Best, in the press release. He added that underwriting results for both homeowners and auto insurers have improved in part because of efforts to ensure premiums more accurately reflect risk.
The report examined state insurance rate filings and found that the large premium increases approved during 2023 and 2024 were largely a response to rising claim frequency and severity. As insurers improved their financial results, the need for substantial rate hikes began to diminish.
One indicator of the turnaround was the homeowners insurance loss ratio, which fell significantly between 2023 and 2025. The improvement suggests insurers are paying out a smaller share of premium dollars in claims than they were during the height of recent market challenges.
Auto insurers also posted stronger results. In 2024, the sector generated its first underwriting profit since 2020, when pandemic-related conditions distorted industry performance. However, AM Best noted that some states continue to experience higher-than-average rate increases. California, Nevada, New Jersey and New York remained outliers in 2025 despite the broader national trend toward moderation.
According to the press release, Dylan Catania, associate analyst at AM Best, said continued improvement in insurer performance could lead to additional moderation in future filings.
"Because insurers in these states experienced more favorable underwriting results in 2025, rate filings in the near future will likely reflect those positive results," Catania said.
The findings suggest that while insurance premiums remain elevated compared with pre-pandemic levels, the rapid pace of increases that characterized recent years may be beginning to subside.
Maura Keller is a Minnesota-based writer and editor, and a regular contributor to PropertyCasualty360.com.
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