Triple-I-Milliman: P/C Insurance Market Profitability Improves in 2024; Expected to Continue in 2025 and 2026

For Immediate Release
Triple-I: Loretta Worters, lorettaw@iii.org
Milliman: Jeremy Engdahl-Johnson, jeremy.engdahl-johnson@milliman.com

MALVERN, Pa., Jan. 16, 2025 – The U.S. property/casualty (P/C) market in 2024 is forecast to have continued its trajectory of improving underwriting results, according to the latest report -- Insurance Economics and Underwriting Projections: A Forward View – from the Insurance Information Institute (Triple-I) and Milliman, a collaborating partner. Further premium growth and improved underwriting performance should continue in 2025 and 2026, provided geopolitical and economic conditions remain relatively stable.

Key Performance Indicators

• Economics: P/C underlying economic growth ended 2024 slightly below U.S. GDP growth at 2.3% versus 2.5% year-over-year (YOY). However, in 2025 and 2026, P/C underlying growth is expected to be above overall GDP growth, an improvement in year-end expectations. A further economic milestone occurred in 2024 with the number of people employed in the U.S. insurance industry surpassing three million.

• Underwriting: P/C net combined ratio (NCR) estimate of 99.5 is a YOY improvement of 2.2 points, while net written premium (NWP) is estimated to increase 9.5% YOY. Personal lines 2024 NCR estimate improved by nearly 1 point relative to our prior estimates, primarily due to better-than-expected Q3 performance in personal auto. Commercial lines 2024 NCR estimate increased by 1.2 points due to commercial property and general liability. NWP growth rate for personal lines is expected to continue to surpass commercial lines by 9 points in 2024.

Additional Report Highlights

• Personal lines: Personal auto projected 2024 NCR of 98.8 is 6.1 points better than 2023, with 2024 NWP growth rate of 14.0% the second highest in over 15 years. Homeowners projected 2024 NCR of 104.8 is a 6.1-point improvement over 2023 despite an above-normal hurricane season.

• Commercial lines: Commercial property projected 2024 NCR of 91.2 is 3.3 points worse than 2023, with Hurricane Milton projected to be the worst catastrophe for commercial property insurance since Hurricane Ian in 2022 Q3. General liability projected 2024 NCR of 103.7 is 3.6 points worse than actual 2023 experience.

Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I, noted that P/C underlying economic growth is expected to remain above overall GDP growth in 2025 (2.3% versus 2.1%) and 2026 (2.6% versus 2.0%) as lower interest rates continue to revive real estate and contribute to higher volume for homeowners' insurance and commercial property.

“This is an improvement on our 2025 P/C underlying growth expectations from second half of 2024” he said. “The pace of increase in P/C replacement costs is expected to overtake overall inflation in 2025 (3.3% versus 2.5%). This aligns with our earlier expectations from the second half of last year.”

“Commercial lines continue to have better underwriting results than personal lines, but the gap is closing,” said Dale Porfilio, FCAS, MAAA, Triple-I’s chief insurance officer. “The impact from natural catastrophes such as Hurricane Helene in Q3 2024 and Hurricane Milton in Q4 2024 significantly impacted commercial property. The substantial rate increases necessary to offset inflationary pressures on losses have driven the improved results in personal auto and homeowners,” he added.

Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman – a premier global consulting and actuarial firm – elaborated on profitability concerns within commercial lines. 

“Commercial auto continues to remain unprofitable. The 2024 direct incurred loss ratio through Q3 is only marginally improved relative to 2023 and is the second highest in over 15 years.”

Regarding general liability, Kurtz said that the line has seen significant worsening, with each quarterly loss ratio in 2024 worse than 2023 on a YOY basis. 

“The 2024 direct incurred loss ratio through Q3 is the highest in over 15 years. As a result, we have increased our expectations for 2025 and 2026 net written premium growth, as the industry responds to the worsening 2024 performance,” he said.

Emma Stewart, FIA, chief actuary, Market Reserving and Capital, Lloyds, added that U.S. general liability has experienced material deterioration in loss ratios and a slowing down of claims development even before 2019, when the pandemic hit.

“A large driver of this has been the post-underwriting emergence of heightened social inflation, or more specifically, legal system abuse and nuclear verdicts,” she said. “If these trends continue to increase, reserves on this class can be expected to deteriorate further.”

Turning to workers’ compensation, Donna Glenn, FCAS, MAAA, chief actuary at the National Council on Compensation Insurance (NCCI), provided a preview of this year’s average lost cost level changes and discussed the long-term financial health of the workers compensation system. 

"The 2025 average loss cost decrease of 6% is moderate, which will inevitably have implications on the overall net written premium change,"  Glenn said.  She added that the –6% average loss cost level change in 2025 is notably different than was seen in 2024: an average decrease of more than 9%, representing the largest average decrease since before the pandemic.  

"Payroll for 2025 will develop throughout the year resulting from both wage and employment levels.  Therefore, overall premium will become clearer as the year progresses," Glenn said. 

Of Note:

Insurance Economics and Underwriting Projections: A Forward View is a quarterly report offered exclusively to Triple-I members and Milliman customers. Members of the media may request copies for reporting purposes only.

About Insurance Information Institute (Triple-I)

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About Milliman

Milliman leverages deep expertise, actuarial rigor, and advanced technology to develop solutions for a world at risk. We help clients in the public and private sectors navigate urgent, complex challenges—from extreme weather and market volatility to financial insecurity and rising health costs—so they can meet their business, financial, and social objectives. Our solutions encompass insurance, financial services, healthcare, life sciences, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information visit www.milliman.com.

About The Institutes

The Institutes are a global not-for-profit comprising diverse affiliates that educate, elevate and connect people in the essential disciplines of risk management and insurance. Through products and services offered by The Institutes’ nearly 20 affiliated business units, people and organizations are empowered to help those in need with a focus on understanding, predicting and preventing losses to create a more resilient world.