A new industry report indicates the U.S. property/casualty (P/C) market in 2024 is forecast to have continued its trajectory of improving underwriting results, according to the Insurance Information Institute (Triple-I) and Milliman.

The report, “Insurance Economics and Underwriting Projections: A Forward View” forecasts further premium growth and improved underwriting performance to. continue through 2026, with the caveat that geopolitical and economic conditions remain relatively stable.

The report found that P/C underlying economic growth ended 2024 slightly below U.S. GDP growth at 2.3 percent versus 2.5 percent year-over-year (YOY).

In contrast, P/C underlying growth is expected to be above overall GDP growth in 2025 and 2026, an improvement in year-end expectations.

An additional economic milestone occurred in 2024 with the number of people employed in the U.S. insurance industry surpassing three million, the report added.

P/C net combined ratio (NCR) estimate of 99.5 is a YOY improvement of 2.2 points, while net written premium (NWP) is estimated to increase 9.5 percent YOY.

Personal lines 2024 NCR estimate improved by nearly 1 point relative to our prior estimates, primarily due to better-than-expected Q3 performance in personal auto.

Commercial lines 2024 NCR estimate increased by 1.2 points due to commercial property and general liability.

The analysis indicated that the NWP growth rate for personal lines is expected to continue to surpass commercial lines by 9 points in 2024.

Personal auto projected 2024 NCR of 98.8 is 6.1 points better than 2023, with 2024 NWP growth rate of 14 percent the second highest in over 15 years.

Despite an above-normal hurricane season, homeowners projected 2024 NCR of 104.8 is a 6.1-point improvement over 2023.

Commercial property projected 2024 NCR of 91.2 is 3.3 points worse than 2023, with Hurricane Milton projected to be the worst catastrophe for commercial property insurance since Hurricane Ian in 2022 Q3, analysis showed.

General liability projected 2024 NCR of 103.7 is 3.6 points worse than actual 2023 experience.

According to Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I, P/C underlying economic growth is expected to remain above overall GDP growth in 2025 (2.3 percent versus 2.1 percent) and 2026 (2.6 percent versus 2 percent) as lower interest rates continue to revive real estate and contribute to higher volume for homeowners’ insurance and commercial property.

“This is an improvement on our 2025 P/C underlying growth expectations from second half of 2024,” he said. “The pace of increase in P/C replacement costs is expected to overtake overall inflation in 2025 (3.3 percent versus 2.5 percent). This aligns with our earlier expectations from the second half of last year.”

“Commercial lines continue to have better underwriting results than personal lines, but the gap is closing,” said Dale Porfilio, FCAS, MAAA, Triple-I’s chief insurance officer. “The impact from natural catastrophes such as Hurricane Helene in Q3 2024 and Hurricane Milton in Q4 2024 significantly impacted commercial property. The substantial rate increases necessary to offset inflationary pressures on losses have driven the improved results in personal auto and homeowners,” he added.

Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman elaborated on profitability concerns within commercial lines.

“Commercial auto continues to remain unprofitable. The 2024 direct incurred loss ratio through Q3 is only marginally improved relative to 2023 and is the second highest in over 15 years.”

Regarding general liability, Kurtz said that the line has seen significant worsening, with each quarterly loss ratio in 2024 worse than 2023 on a YOY basis.

“The 2024 direct incurred loss ratio through Q3 is the highest in over 15 years. As a result, we have increased our expectations for 2025 and 2026 net written premium growth, as the industry responds to the worsening 2024 performance,” he said.

Emma Stewart, FIA, chief actuary, Market Reserving and Capital, Lloyds, added that U.S. general liability has experienced material deterioration in loss ratios and a slowing down of claims development even before 2019, when the pandemic hit.

“A large driver of this has been the post-underwriting emergence of heightened social inflation, or more specifically, legal system abuse and nuclear verdicts,” she said. “If these trends continue to increase, reserves on this class can be expected to deteriorate further.”

Donna Glenn, FCAS, MAAA, chief actuary at the National Council on Compensation Insurance (NCCI), provided a preview of this year’s workers compensation average lost cost level changes and discussed the long-term financial health of the system.

“The 2025 average loss cost decrease of 6 percent is moderate, which will inevitably have implications on the overall net written premium change,” Glenn said.

The 6 percent loss cost level change in 2025 is notably different than in 2024, with an average decrease of more than 9 percent, representing the largest average decrease since before the pandemic.

“Payroll for 2025 will develop throughout the year resulting from both wage and employment levels. Therefore, overall premium will become clearer as the year progresses,” Glenn said.