US P&C insurance industry generated $170bn net income in 2024: Verisk, APCIA

According to Verisk, a provider of data analytics and technology solutions, and the American Property Casualty Insurance Association (APCIA), the primary national trade association for home, auto, and business insurers, the US property and casualty insurance industry is estimated to have earned $170 billion in net income for 2024.

However, it’s important to note when adjusted for over $70 billion in capital gains realised by one insurer, the industry’s net income for the year is revised to approximately $100 billion, but still far above 2023’s $40.9 billion.

Verisk’s report highlights significant improvements in several key areas for the industry. The underwriting gain for 2024 was estimated at $24.8 billion, a notable reversal from the $21.8 billion underwriting loss recorded in 2023.

This is the first full-year underwriting gain in four years, reflecting an industry-wide effort to better align premiums with the levels of risk faced by insurers.

Insurers wrote $926 billion in premiums during 2024, up from $851 billion the previous year, while earned premiums grew by 9.8% to reach $895 billion, continuing the upward trend of the prior year.

The combined ratio, a crucial measure of profitability, improved significantly in 2024, dropping from 101.6% in 2023 to 96.4% in 2024.

The net written premiums increased by $29.8 billion in the second half of 2024, a growth of 6.9% compared to the same period in 2023.

Additionally, the policyholders’ surplus increased to $1,082 billion at the end of 2024, up from $1,013 billion at the end of 2023.

Despite facing challenges in the second half of 2024 from natural disasters, including Hurricanes Helene and Milton, the industry managed to show robust growth. All in all, incurred losses and loss adjustment expenses increased to $634.4 billion in 2024 from $622.4 billion in 2023.

In terms of investments, the sector generated net investment gains of $163.6 billion, a stark improvement on the prior year’s total of $73.4 billion.

“While many of the loss drivers of 2023 persisted into 2024, the industry’s ability to bring premiums closer to the requisite levels has led to an underwriting gain for the first time since 2020,” added Saurabh Khemka, co-president of Underwriting Solutions at Verisk.

“However, the broader market continues to face challenges, particularly in property coverages, where the impact of natural catastrophes remains a defining issue. The increasing frequency and severity of these events reflect shifting weather patterns and evolving risk landscapes, underscoring the growing complexity of underwriting in the property/casualty space.

“Last year marked the second worst year for catastrophic losses since 1950, with the vast majority of damages stemming from hurricane and convective storm activity. Most notably, Hurricane Milton, along with a series of late-season storms, drove fourth-quarter catastrophe claims to surge 113 percent higher than the same period in 2023, highlighting both the volatility and financial strain insurers face.”

Khemka further added: “On a positive note, personal auto demonstrated improvements, primarily due to necessary premium adjustments within personal lines. While commercial auto premiums followed a similar trend, its growth rate did not match the levels seen in 2023.

“These shifts signal a market recalibrating in response to prolonged underwriting losses, but with ongoing uncertainty, carriers will need to balance pricing, risk selection and claims management strategies to sustain profitability. Looking ahead, insurers will continue to rely on technology that enhances data-driven decision making and underwriting accuracy.”

“The property casualty insurance industry continued to stabilise in 2024, with a swing from close to a $22 billion net underwriting loss to a nearly $25 billion net underwriting gain. Net income for the year improved significantly as well, although roughly 40 percent resulted from the capital gains of unusual stock sales by a multinational conglomerate that owns several insurers,” said Robert Gordon, senior vice president, policy, research and international at APCIA.

“By this time next year, homeowners insurers will have likely reported seven consecutive years of net underwriting losses, including record insured losses caused by the California wildfires this January. Personal auto insurance loss ratios improved in 2024 but continue to be impacted by rising inflation and legal system abuse, and proposed tariffs could result in an estimated additional $7-24 billion in annual auto insurance claims costs.”

Gordon continued: “Insurers significantly increased loss and loss adjustment reserves at the end of 2024 to reflect escalating adverse development resulting from worsening legal system abuse and social inflation. Insurers are also deeply concerned about the market impact of pressures in California to retroactively change claims settlement standards for contents and expand coverage standards for wildfire smoke in an already extremely distressed homeowners insurance market.”

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