A.M. Best maintains positive outlook for industry, with some caveats

ORLANDO, Fla. — A.M. Best has maintained its positive outlook for the global insurance industry but has different views on some of the sector’s segments and subsegments.

The credit rating agency’s outlook is stable for personal and commercial lines, but there are some negative pressures on subsegments such as homeowners, directors and officers, general liability and commercial auto, according to Carlos Wong-Fupuy, senior director, commercial and specialty, for A.M. Best, who spoke Monday at the annual meeting of the American Property Casualty Insurance Association.

One reason for the positive outlook is that 2025 is on track to be the third year with companies producing, on average, a 20% return on capital, which began in 2023.

During that time frame, the market has remained very well capitalized and has not suffered substantial capital erosion from significant events.

Meanwhile, business continues to flow into the surplus lines market because of the pricing of some business in the admitted markets, according to Jackie Lentz, also a senior director, commercial and specialty, for A.M. Best.

Pricing has risen for certain commercial line coverages over the past three years, such as commercial auto, including trucking, and catastrophe-exposed property. As some insurers step away to focus on more core business, “it has let moderate hazard accounts flow to the surplus lines market,” Ms. Lentz said.

That has been bolstered by emerging risks including cyber, autonomous vehicles and artificial intelligence, which because of their limited loss histories and evolving nature are sometimes more suited to surplus lines coverages.