The commercial auto insurance sector in the United States continues to weigh on the property and casualty (P&C) industry, with net underwriting losses exceeding $10 billion over the past two years, according to a new report from AM Best.
The report highlights persistent challenges for commercial auto insurers. The segment has now recorded an underwriting loss for 14 consecutive years. In 2024, total underwriting losses reached $4.9 billion. Over the last 11 years, the average annual underwriting loss has been slightly more than $2.9 billion.
The report attributes ongoing losses to rising loss severity, increasing claims costs, and adverse development of prior-year loss reserves. Despite these challenges, there has been some improvement in operational efficiency.
“One bright spot to note is that during the past decade, insurers have trimmed about six percentage points off their underwriting expense ratio for commercial auto insurance,” said Christopher Graham, senior industry analyst at AM Best.
Graham noted that commercial auto insurers, though less recognized than their personal auto counterparts for technology adoption, have made progress in improving efficiency.
The report comes as leading commercial auto insurers continue to shape the market landscape. Progressive Insurance, which currently holds the largest market share at 11.9%, wrote $10.8 billion in direct premiums in 2024 and reported an 88.2% net combined ratio.
Other major insurers such as Old Republic International, Zurich Insurance Group, and Auto-Owners Insurance also surpassed $2 billion each in direct premiums written last year, reflecting the scale and competition within the sector.
Some of these insurers have reported notable financial shifts. State Farm Group, for example, moved to a net income of $5.3 billion in 2024 after a $7 billion improvement in underwriting losses in its auto segment.
Liberty Mutual Insurance also saw a turnaround, posting $4.38 billion in net income for the year, aided by a 17% reduction in catastrophe losses and a combined ratio of 95.9%.
AM Best also points to a notable divergence between auto liability and physical damage results. While underwriting expense ratios for both coverage types have improved by about three percentage points compared to six or seven years ago, the net loss and loss adjustment expense (LAE) ratio remains significantly higher for liability coverage.
The difference between compulsory liability coverage and optional physical damage coverage may influence insureds’ decisions. “Even if insureds find benefits in physical damage coverage, they may opt for higher deductibles to pay less for coverage,” Graham said.
Despite substantial rate increases, commercial auto insurers have struggled to counteract the impact of inflation, higher replacement costs due to technological advancements, and rising labor costs for repairs.
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