Milliman, a consulting and actuarial firm, reports that the US property & casualty (P&C) insurance industry achieved its strongest underwriting performance since 2013 in 2024.
The net combined ratio (NCR) for the year stood at 96.6, representing a 5.1-point improvement from the previous year.
These findings are presented in the latest Insurance Economics and Underwriting Projections: A Forward View, developed in collaboration with the Insurance Information Institute (Triple-I).
Personal insurance lines played a central role in this improvement, helping to narrow the profitability gap with commercial coverage. Both segments posted NCRs below 100, reflecting broad underwriting profitability.
Personal auto showed a particularly sharp turnaround, ending 2024 with an NCR of 95.3—an improvement of 9.6 points from 2023—driven by strong net written premium (NWP) growth of 14.4% in 2023 and 12.8% in 2024.
Homeowners insurance also saw meaningful gains, reporting a 2024 NCR of 99.7, its first sub-100 result since 2019 and an 11.2-point improvement from the prior year. NWP growth in the homeowners segment reached 13.6%, the strongest increase in over 15 years.
Despite the strength of the 2024 results, Milliman cautions that several emerging challenges may hinder progress in the year ahead. The January wildfires in Los Angeles County are expected to result in the P&C industry’s weakest first-quarter performance in over 15 years, placing early pressure on underwriting results.
At the same time, the economic impact of existing and newly expanded tariffs is beginning to surface, contributing to rising replacement costs and slowing premium growth—initially in personal auto, and increasingly across homeowners, renters, commercial auto, and commercial property lines.
Michel Léonard, Ph.D., CBE, Chief Economist and Data Scientist at Triple-I, highlighted that the P&C sector’s underlying economic growth is projected at 5% year-over-year in 2025—twice the US GDP forecast of 2.5%. He added that while replacement costs within the sector were initially projected to rise more slowly than overall inflation, that dynamic could shift. “While P&C economic drivers continue to outperform the broader US economy – with stronger growth and lower replacement cost inflation – we now anticipate a shift in 2025 due to ongoing and expanded tariffs,” added Léonard.
“These headwinds are expected to slow the sector’s momentum, potentially leading to a contraction later in the year that could exceed the overall GDP slowdown. Additionally, replacement costs, initially projected to rise more slowly than CPI, may accelerate and begin to outpace it, adding further pressure. Even though rising costs may lead to additional premium increases, these will likely be insufficient to offset slowing consumer spending and corporate investment.”
The commercial insurance segment continues to face structural pressure. General liability reported its weakest NCR since 2016, due to significant reserve strengthening throughout the year. Milliman also emphasized that adverse prior year development (PYD) remains a persistent drag on profitability in both general liability and commercial auto—extending a negative trend now in its third consecutive year.
Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, noted that workers’ compensation remains one of the industry’s most stable lines. It once again benefited from favourable prior year development, marking the eighth consecutive year of positive contribution.
However, he also flagged concerns in other areas, stating: “The 2024 net combined ratio of 110 included a staggering nine points of adverse prior year development, amounting to more than $9 billion of reserve strengthening, the highest seen in at least 15 years. It is also concerning that the hard-market years 2020-2023, which saw significant rate increases, are also seeing reserve increases.”
Donna Glenn, FCAS, MAAA, Chief Actuary at the National Council on Compensation Insurance (NCCI), reinforced the sector’s strong footing. She previewed changes to average lost cost levels for the year and highlighted the continued financial strength of the workers’ compensation system.
“The workers’ compensation system continues an era of exceptional performance with strong results and a financially healthy line. And while there are early indications of potential headwinds on the horizon, the industry is positioned well to navigate these challenges,” said Glenn.
While 2024 stands out as a benchmark year for underwriting gains, Milliman warns that a mix of environmental losses and evolving economic pressures could challenge the sector’s ability to sustain this momentum. The industry’s response to these developments will be critical in shaping its performance in 2025.
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