Fitch: US commercial lines combined ratio to ‘deteriorate slightly’ in 2025

By Michael Loney

May 28 - (The Insurer) - Underwriting performance in the overall U.S. commercial lines insurance market was essentially flat in 2024, with slight deterioration expected this year along with a slowing in premium growth, Fitch said.

A new Fitch report said that the U.S. commercial insurance market had a 97% combined ratio, excluding mortgage insurance and financial guaranty, in 2024. This was the fourth consecutive year it reported an underwriting profit.

Commenting on 2025, the report said: “For the year, Fitch expects the industry commercial lines combined ratio to deteriorate slightly but still report an underwriting gain.”

Workers’ compensation has produced the best underwriting profits of any major commercial lines segment, with an 89% average combined ratio over the 2020 to 2024 period.

“This segment also remained the primary source of favorable reserve development in 2024, which was offset by adverse development in other lines, primarily commercial auto and other liability – occurrence,” the report said.

Commercial lines net written premium growth has slowed over the past four years, from 15% in 2021 to 4% in 2024, which Fitch said was slightly below historical norms.

“Revenue expansion is likely to slow further in 2025, except for underperforming segments that will continue to generate significant rate increases such as general liability and commercial auto,” the report said.

The rating agency also commented that competitive forces create challenges in maintaining premium increases. It added that claims trends will remain unpredictable amid macroeconomic uncertainty and the potential for tariff-induced inflation.

“Underwriting and claims challenges remain most pronounced in longer-tail liability segments with exposure to heightened litigation activity and uncertainty from large settlements and verdicts,” the report said.