The US property/casualty insurance industry entered 2025 with uneven underwriting conditions across lines, according to a joint report by the Insurance Information Institute (Triple-I) and Milliman.
For personal auto, the net combined ratio (NCR) for 2025 is forecast at 96.0, about 1 point higher than the 2024 figure. While this reflects a slight increase, the segment remains on a path toward sustainable profitability.
Recent data from LexisNexis shows a 17% year-over-year increase in driving violations, including a 16% rise in major speeding violations and a 50% increase in distracted driving citations between 2023 and 2024.
In homeowners insurance, the sector recorded its worst first-quarter loss ratio in more than 15 years. The January 2025 wildfires in Los Angeles were identified as a major contributor to the sharp rise in losses, marking the worst quarterly performance since the second quarter of 2011.
Recent figures also indicated that wildfire-related damages in 2024 reached $5.5 billion, up from $1.2 billion in 2015. The rising frequency and intensity of wildfires have led some insurers to reduce their exposure in high-risk regions or exit certain markets entirely.
General liability continues to face profitability pressures. The Q1 2025 loss ratio in this segment was the second worst for a first quarter in over 15 years, improving less than one point from the prior year. Analysts suggest this trend indicates persistent underwriting challenges.
Overall, the P&C industry’s net written premium growth is forecast at 6.8% for 2025, down from 8.8% in 2024, and the lowest annual growth since 2020. Personal lines are expected to outpace commercial lines growth by 1.5 percentage points, though that differential is projected to narrow by 2027.
The industry-wide NCR for 2025 is projected to rise to 99.3, an increase of 2.7 points over 2024. Despite pressures in some lines, the outlook for 2026 includes a return to broader profitability.
Triple-I chief economist and data scientist Michel Léonard (pictured above) said that “the US economy and P/C industry have been resilient in the face of tariffs and trade uncertainty. The insurance industry's economic growth drivers continue to outperform overall US GDP growth.”
Léonard cautioned, however, that revised economic data expected in the summer could show weaker conditions.
“With inventories running low, their depletion will now accelerate inflation and slow growth for the rest of the year,” he said.
He added that personal auto has experienced the most significant inflationary pressure, with used car and truck prices rising 7.7% in the first half of 2025.
Insurers have adjusted pricing models to reflect these cost pressures, driven in part by tariffs and global supply constraints. Industry projections suggest that auto insurance rates could rise by 6% to 10% by the end of 2025.
Jason B. Kurtz, a principal and consulting actuary at Milliman, said the commercial auto segment is expected to remain unprofitable through 2027. This forecast comes despite a continued estimate of double-digit premium growth in 2025.
“For general liability, the NCR is expected to improve in 2026-2027 but remain unprofitable. It is worrisome that the first quarter 2025 direct incurred loss ratio was only marginally improved relative to the first quarter of 2024, and that these two results are the highest first quarter loss ratios in more than 15 years. On a positive note, premium growth does appear to be picking up,” Kurtz said.
In the workers’ compensation line, the 2025 NCR is now projected at 90.6, an improvement of 1.0 point from earlier estimates. Kurtz noted that the Q1 2025 loss ratio was the lowest the line has seen in more than 15 years.
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