The Insurance Information Institute (Triple-I) announced on May 14 that the U.S. property and casualty insurance industry saw better underwriting conditions in 2025, following several years of high catastrophe losses, inflation-driven claims costs, and economic volatility after the pandemic. The industry’s net combined ratio reached its lowest level in more than a decade, signaling improvement across many major insurance lines.
This development is important because it reflects stabilization after a period of financial strain for insurers. According to Triple-I’s members-only briefing with Milliman, these improvements come despite ongoing risks from catastrophes and persistent economic uncertainty.
Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I, said: “The industry’s 2025 results should be viewed in the context of the significant financial strain insurers have faced in recent years. Although conditions have stabilized somewhat, insurers continue to operate in an environment marked by elevated catastrophe risk, higher claims severity and ongoing economic uncertainty.”
Léonard also said: “Real GDP growth slowed to 2.0% in the first quarter, while Consumer Price Index inflation remained elevated at 3.3% in March, remaining above the Federal Reserve’s long-term target. Insurance employment declined 1.8% year-over-year in March, underperforming the broader labor market and reflecting continued weakness in sector employment conditions. Meanwhile, higher energy prices and persistent inflationary pressures continue to strain household and business finances.”
Key findings include a forecasted underlying P/C growth rate of -3.7% for early 2026 compared to positive growth last year; replacement cost growth projected at 2.1%, consistent with previous levels; personal auto showing improved net combined ratios; homeowners’ insurance improving despite continued catastrophes such as Los Angeles fires; broad improvements across major lines but continuing profitability pressures on some commercial segments.
Patrick Schmid, Ph.D., chief insurance officer at Triple-I said: “Replacement costs moderated significantly from their 2022 peak, but our forecasts show them re-accelerating through 2028 and eventually outpacing overall U.S. inflation.” He added: “While underwriting conditions have strengthened in some property lines, the industry faces a challenging road ahead with elevated catastrophe exposure, economic uncertainty and persistent claims-cost pressures.” General liability and commercial auto remain above a net combined ratio of one hundred but are expected to improve gradually through upcoming years.
Jason B. Kurtz of Milliman commented that general liability and commercial auto face significant profitability challenges due to litigation pressures and claim severity trends.
Donna Glenn from NCCI reported: “The preliminary reported combined ratio for calendar year 2025 is 91, an increase of about five points from the prior year,” attributing this change mainly to increased loss and expense ratios.
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