The US commercial lines insurance sector reported stable underwriting results in 2024, with the industry posting a 97% combined ratio, according to a new report from Fitch Ratings.
This marked the fourth consecutive year of underwriting profitability, excluding mortgage insurance and financial guaranty segments.
Workers’ compensation continued to lead all major commercial lines, maintaining its position as the top-performing segment. The five-year average combined ratio for workers’ compensation stood at 89% from 2020 through 2024.
It also remained the main contributor to favorable reserve development in 2024, which Fitch noted was offset by adverse reserve developments in segments such as commercial auto and other liability – occurrence.
Despite underwriting gains, growth in net written premiums (NWP) for commercial lines slowed for the fourth year in a row. NWP increased by 15% in 2021 but dropped to 4% in 2024, a figure Fitch described as slightly below long-term industry averages.
The outlook for 2025 points to continued sluggish growth, although underperforming sectors such as general liability and commercial auto are projected to sustain significant rate increases.
Fitch anticipates a slight deterioration in the commercial lines combined ratio in 2025, though the segment is expected to remain profitable on an underwriting basis. The report highlights continued pressure from competitive pricing and claims volatility, especially in longer-tail liability lines.
These segments face elevated litigation exposure and uncertainty from large settlements and verdicts, with macroeconomic instability and potential tariff impacts adding further unpredictability.
Meanwhile, the personal lines insurance sector, which accounts for over 54% of the US property and casualty industry’s net written premiums, returned to underwriting profitability in 2024.
According to Fitch, the sector recorded a combined ratio of 97%, down from 107% in 2023. The improvement ended a three-year stretch of underwriting losses, with the turnaround driven by easing claims severity, steady claim frequency, and higher premiums from rate increases.
Personal auto insurance, representing 38% of total industry premiums, showed marked improvement following several years of volatility. The 2024 results reflect the effects of previous rate actions and adjustments to underwriting, alongside a moderation in claims trends.
The homeowners’ insurance segment, which comprises 16% of industry premiums, posted a slight underwriting gain in 2024. Its combined ratio improved by 11 points to 99.7%, despite elevated catastrophe losses. Fitch attributed the gain to rate hikes and a slowdown in inflation for construction inputs.
However, losses from Hurricanes Helene and Milton, as well as additional weather-related events, offset some of the improvement.
The volatility in the homeowners' line continues into 2025, as catastrophe losses in the first quarter reached an estimated $50 billion. Of this, $38 billion resulted from wildfires in California, while severe convective storms accounted for another $10 billion.
This quarterly total is nearly three times the average for the same period between 2020 and 2024, reflecting the outsized impact of recent natural disasters on the sector.
Looking ahead, Fitch expects personal auto premium growth to taper in 2025 as profitability strengthens and market competition increases. Nevertheless, further pricing adjustments may be required if vehicle repair costs escalate due to tariffs or continued supply chain issues.
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