The U.S. property/casualty industry posted its best underwriting profit and combined ratio in a decade in 2025, building upon the $1 trillion of total direct premiums written logged the prior year for the first time.
According to a new report from industry financial strength rating agency AM Best, DPW grew 5% in 2025 to about $1.11 trillion.
Overall, the industry’s combined ratio finished at 93 in 2025—an improvement of 3.6 points over 2024.
After several years of booking underwriting losses, U.S. P/C insurers recorded underwriting income of about $23 billion in 2024 and then increased it another $38 billion to a total of $61.2 billion in 2025 on the strength of personal lines.
“Insurers underwriting both personal auto and homeowners’ lines of coverage have reaped the benefits of technology and data analytics to supplement underwriting, claims handling and ratemaking,” said David Blades, associate director, AM Best. “For both lines, there was significant rate momentum coming into 2024 that flowed through net earned premium in both that year and 2025, aiding bottom-line results.”
Net underwriting income in homeowners multiperil and private passenger auto in 2025 was about $16.8 billion and $28.9 billion, respectively. In 2024, homeowners insurers reported an underwriting loss of about $1.5 billion after booking a loss of nearly $16 billion in 2024. Net losses incurred dropped 7.1% despite the losses absorbed from the early 2025 California wildfires.
Meanwhile, personal auto insurers in 2025 more than doubled underwriting income from the $13.8 billion recorded in 2024.
“Regulators have let carriers accelerate the frequency and degree of rate change filings while remaining diligent in reviewing rate adjustments,” AM Best said. “The backlog of request from earlier years has decreased,” and the wait time for a decision on a filing has lessened, the rating agency added.
Both segments have a stable outlook from AM Best. Together, net underwriting income jumped to $5.8 billion in 2025 from $12.4 billion in 2024.
Overall, U.S. commercial insurers appear to have performed well, more than doubling underwriting income to $19.2 billion in 2025. However, not all lines enjoyed positive results.
In commercial auto, there was improvement from the $4.9 billion underwriting loss of 2024 but the line was still in the red in 2025 with a loss of about $1.9 billion. AM Best said physical damage remains profitable but liability losses “keep mounting,” as insurers recorded another $2 billion in reserve deficiencies in 2025.
AM Best’s outlook here is negative, as it is for other liability (occurrence), where more claims and legal costs — and the emergence of new kinds of litigation — have a drag on results though the underwriting loss improved to about $11 billion in 2025 from about $13.7 billion in 2024. Net losses incurred increased to a five-year high of nearly $50 billion thanks to litigation costs, and the combined ratio for 2025 was 114.7. This was an improved result from the 120.3 combined recorded for the prior year as premiums grew faster than losses.
Social inflation continues to be a major factor in general liability, said AM Best, and new exposures may be on the horizon with the rapid growth of artificial intelligence and new class-action litigation in the drug, food, and chemical industries. The agency noted PFAS claims are “developing at an accelerating pace.”
Topics USA Trends Property Casualty Market
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