The US personal auto insurance industry recorded its most profitable underwriting performance since the pandemic, posting a net combined ratio of 95.3 in 2024, according to a new Issues Brief released by the Insurance Information Institute (Triple-I). Despite the financial gains, the report warns of intensifying headwinds stemming from legal system abuse and regulatory delays.
“While the improved 2024 underwriting performance is encouraging, we remain focused on several challenges facing the personal auto insurance industry,” said Triple-I CEO Sean Kevelighan. “The growing impacts of legal system abuse, driven by the exploitive tactics of billboard attorneys, combined with an increasingly complex regulatory environment, will continue to put pressure on the market.”
The industry’s underwriting profitability was supported by a 12.8% increase in net written premiums in 2024. This follows a 14.4% rise in 2023, marking two consecutive years of double-digit premium growth. These figures reflect the sector’s efforts to match pricing with rising risk levels and to implement loss control strategies effectively.
Loss performance also improved significantly. The direct incurred loss ratio declined from a peak of 86% in Q4 2022 to 64% by year-end 2024, a drop of 21.7 percentage points. Triple-I noted that this turnaround stemmed from improved claims management and better pricing alignment.
Historically, the personal auto insurance line has outperformed the broader US property/casualty (P/C) industry’s net combined ratio in half of the years since 2005.
Despite these improvements, Triple-I underscored ongoing risks that may hamper future performance.
A joint study by Triple-I and the Casualty Actuarial Society estimated that from 2014 to 2023, legal system abuse added between $76.3 billion and $81.3 billion to liability losses and legal defense costs in the auto insurance sector. The report attributed this increase to billboard attorneys, who are said to aggressively promote litigation and contribute to growing jury awards.
Meanwhile, the regulatory landscape has become more difficult to navigate. From 2010 to 2023, the average time needed to approve rate filings rose by 40%, and the share of filings receiving less rate relief than requested grew by 10 percentage points. These trends may limit insurers’ flexibility in pricing and could impact availability for consumers, according to Triple-I.
Claim frequency remains lower than pre-pandemic levels, but severity continues to rise. Between 2019 and 2024, pure premium trends increased by 25 points, underscoring ongoing inflationary and litigation-related pressures.
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