The US property and casualty (P/C) insurance industry closed 2025 with its strongest underwriting performance in more than a decade, as the net combined ratio fell to its lowest level in over 10 years following a stretch of heavy catastrophe losses, inflation-driven claims costs and post-pandemic volatility.
The findings come from "P/C Economics and Underwriting Projections: A Forward View," a new briefing from the Insurance Information Institute (Triple-I) and Milliman.
Triple-I chief economist and data scientist Michel Léonard (pictured above) said the 2025 results should be read against the financial strain of recent years, noting that "insurers continue to operate in an environment marked by elevated catastrophe risk, higher claims severity and ongoing economic uncertainty."
Léonard added that real GDP growth slowed to 2.0% in the first quarter, while CPI inflation stayed at 3.3% in March, above the Federal Reserve's long-term target. Insurance employment fell 1.8% year-over-year in March, lagging the wider labor market.
Underlying P/C growth for the first half of 2026 is forecast at -3.7%, down from 1.6% in 2025, with a rebound expected in 2027 and 2028.
Replacement cost growth is projected at 2.1% in the first half of 2026, level with 2025, and is expected to converge in 2027 before outpacing broader US inflation by 2028.
Personal auto kept improving in 2025, with a net combined ratio of 91.8, 3.5 points better than 2024, while net written premium growth eased to 4.0%, the lowest since 2021. Homeowners posted an NCR of 88.1, the lowest in more than a decade, even with first-quarter catastrophe activity that included the Los Angeles wildfires.
Patrick Schmid, chief insurance officer at Triple-I, said replacement costs have moderated from their 2022 peak but are forecast to re-accelerate through 2028 and eventually outpace overall US inflation, keeping property carriers focused on pricing discipline.
General liability and commercial auto remain the only major lines above a 100 NCR in the casualty segment. Milliman's Jason B. Kurtz said litigation pressures and claims severity continue to drive elevated loss costs in these casualty lines.
Workers' compensation, another core casualty line, continues to perform strongly, with NCRs projected in the low 90s through 2026-2028.
NCCI chief actuary Donna Glenn said the preliminary reported combined ratio for calendar year 2025 came in at 91, up about 5 points from the prior year, with the change "primarily due to an increase in the loss and underwriting expense ratios."
Broader industry data points to the same trend underpinning the Triple-I/Milliman view. Private US property and casualty insurers booked an estimated net underwriting gain of about $63 billion for full-year 2025, up from a $23 billion gain in 2024 and a $22 billion loss in 2023, with the full-year combined ratio improving to 92.9% from 96.6% and policyholders' surplus climbing to $1.2 trillion.
Verisk's Saurabh Khemka tied much of the swing to a near-90% drop in hurricane-related claims, framing 2025 as a "reset" after volatility rather than a structural shift in industry risk.
