AM Best: Personal auto drives turnaround in US P&C 2024 underwriting performance

By David Bull

June 26 - (The Insurer) - The U.S. P&C industry swung to a $22 billion net underwriting gain last year from a $23 billion loss in 2023, largely because of a $31 billion turnaround in the personal auto line of business, according to AM Best.

In a new report detailing the 2024 financial results for each line of P&C business in the U.S., the rating agency noted that personal lines results propelled a turnaround in the sector’s underwriting performance, as premiums also topped $1 trillion for the first time ever.

AM Best said that the personal auto segment had produced net underwriting losses for three consecutive years before returning to profit in 2024.

It also highlighted an improvement in the homeowners/farmowners line of business, which produced a $2.1 billion underwriting loss in 2024 compared with a $16 billion loss the previous year.

David Blades, associate director for industry research and analytics at AM Best, said: “Persistent efforts to improve rate adequacy, combined with the benefits of the continued leveraging of technology and data analytics to supplement underwriting, claims handling and ratemaking finally bore fruit in 2024.

“However, considering the losses from the devastating California wildfires, it’s highly questionable whether at least the homeowners’ underwriting performance from 2024 can be sustained in 2025.”

COMMERCIAL LINES PROFITABLE

Commercial insurance lines continued to be profitable in 2024 with a number of lines benefiting from further pricing improvement and “more effective risk selection”, said the report.

It highlighted an $8.1 billion net underwriting gain in commercial property, compared with a $1.9 billion loss in 2023.

Workers’ compensation and other liability (claims made) generated an underwriting profit, although each line suffered a tightening of profit margin.

But other liability on an occurrence basis suffered significant deterioration, with the line of business including umbrella and excess liability coverage.

Christopher Graham, senior industry research analyst at AM Best added: “Insurers of these coverages have pushed to achieve pricing levels more indicative of recent loss trends, with larger commercial auto losses having a negative impact on umbrella and excess lines’ profitability.”