Fitch Ratings, a global credit ratings agency and financial information provider, reports that the US personal lines insurance market returned to underwriting profitability in 2024 after three consecutive years of losses.
Fitch reports that the sector’s statutory combined ratio dropped from 107% in 2023 to 97% in 2024, marking a 10-point improvement.
The company highlights that personal lines insurance is the largest component of the US property and casualty (P/C) insurance sector, comprising more than 54% of the industry’s net written premiums in 2024.
Of this, personal auto insurance represents the largest share at 38%, followed by homeowners insurance at 16%.
The strong overall growth of personal lines premiums—13% in 2024, slightly down from 14% the year before—was largely the result of continued aggressive rate adjustments as insurers sought to offset prior underwriting challenges.
The turnaround in personal auto insurance performance is particularly significant. After years of volatility and underwriting losses, the 2024 improvement reflects the outcome of multiple quarters of rate increases and targeted underwriting actions, according to Fitch.
The combined ratio for personal auto fell by nearly 10 points to 95.3%, driven by gains in both auto liability and physical damage lines.
The latter, in particular, showed a sharp recovery with a combined ratio of 87.9%—the best since 2004—as premium income began to catch up with earlier cost increases and inflationary pressures began to ease.
In the homeowners segment, Fitch reports a modest underwriting gain in 2024, despite experiencing above-average catastrophe losses.
The combined ratio saw an 11-point improvement, reaching 99.7%, supported by higher premiums and a decline in claim severity as prices for building materials and contract labor began to level off. Despite this progress, losses from events such as Hurricanes Helene and Milton, along with extensive severe weather, continued to impact financial results negatively.
Looking toward 2025, Fitch anticipates that growth in personal auto premiums will slow, reflecting the recent turnaround in profitability and heightened competition in the market. However, the firm warns that additional rate increases might be necessary if costs for vehicle repairs rise again, potentially driven by tariffs or disruptions in the supply chain.
In the homeowners insurance sector, natural disaster-related losses remain a significant challenge. Catastrophe claims in the first quarter of 2025 are estimated at $50 billion—almost three times the average for that same period over the past five years. This surge was largely due to destructive California wildfires and intense convective storms.
Fitch also provides insight into market share dynamics. The agency notes that Progressive has been closing in on State Farm’s lead in the personal auto sector and, if current growth trends continue, could become the largest auto insurer by 2028—or even sooner.
Progressive grew its policy count by 4.3 million in 2024 and maintained a combined ratio under 90%, reflecting strong growth alongside effective risk management. By contrast, State Farm’s premium increases were largely driven by higher rates, but both it and Auto Club Group continued to report combined ratios exceeding 100%, pointing to persistent underwriting losses.
In homeowners insurance, the sector remains more fragmented than auto. State Farm continues to lead with close to 20% of the market, with Allstate and USAA trailing behind.
According to Fitch Ratings, insurers such as Allstate, USAA, Travelers, and American Family have increased their market presence in recent years, helped by targeted expansion efforts and pricing strategies that resonate with consumers.
Overall, Fitch Ratings characterises the 2024 performance of the personal lines insurance sector as a critical step toward financial stability, after years of difficulty driven by rising costs and unpredictable claims patterns.
However, the agency emphasises that ongoing risks—including climate-driven catastrophe exposure, economic volatility, and potential regulatory hurdles—will continue to test insurers’ adaptability and pricing strategies in 2025 and beyond.
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