The US property and casualty (P&C) industry saw notable improvements in underwriting results through Q3 2023, with the homeowners/farmowners and private passenger auto lines showing significant progress compared with the previous year.
According to a new AM Best report, the homeowners’ line recorded 13.8-percentage point improvement in its direct incurred loss ratio.
The findings, outlined in AM Best’s “3Q24 Snapshot: Personal Lines Propels Improvement in Direct P/C Industry Underwriting Results,” are based on third-quarter statutory statements submitted by companies and aggregated by AM Best as of January 6, 2025.
The report highlights that, for the first nine months of 2024, the US property/casualty industry experienced improved direct underwriting results, mainly due to an increase in earned premiums. These gains outpaced the rise in incurred loss and loss adjustment expenses, as well as other underwriting expenses.
The personal lines segment showed the most improvement, driven by efforts to secure more adequate rates, better pricing segmentation in personal auto, the impact of underwriting initiatives, and enhanced catastrophe risk management.
"Despite four hurricanes making landfall in the third quarter of 2024, including Hurricane Helene, the property/casualty industry’s direct loss ratio for the first nine months was 5.4 percentage points better than the same prior-year period," said David Blades, associate director of Industry Research and Analytics at AM Best.
"Although that provides optimism for full-year direct and net results, Hurricane Milton, which occurred in the fourth quarter, is expected to have a greater impact on homeowners and commercial property results than Helene,” said Blades. “Additionally, a fuller picture of the impacts of the ongoing wildfires in California will not be clear until first-quarter 2025 results are available in late spring."
The personal auto segment saw a nearly 10-percentage point improvement in its direct loss ratio through the third quarter of 2024, along with a 14% rise in direct premiums written. Overall, direct premiums written across the property/casualty industry grew by 9.1%, compared to a 10.2% increase through the same period in 2023.
“The workers’ compensation line was the only line of business to see a measurable decline in direct premium through the first nine months of 2024, reflecting the downward pressure that long-term favorable underwriting results continue to have on prevailing rates across most states,” noted Helen Andersen, industry analyst at AM Best. “Overall, social and medical inflation on claim costs continue to negatively impact the margins for general liability underwriters.”
