The U.S. property/casualty insurance industry reached its lowest net combined ratio in over a decade in 2025, according to a May 14 report from the Insurance Information Institute and Milliman. The improvement comes after years of financial strain and reflects better underwriting conditions as the sector recovers from pandemic-related volatility and inflation.
This development is significant for insurers, policyholders, and businesses because it suggests increased stability within an industry that underpins much of the U.S. economy. Despite this progress, experts say ongoing economic uncertainty continues to present challenges.
Triple-I Chief Economist and Data Scientist Michel Léonard said these results “should be viewed in the context of the significant financial strain insurers have faced in recent years.” Léonard also said, “Although conditions have stabilized somewhat, insurers continue to operate in an environment marked by elevated catastrophe risk, higher claims severity, and ongoing economic uncertainty.” He added that “insurance employment declined 1.8 percent year over year in March, underperforming the broader labor market and reflecting continued weakness in sector employment conditions,” while noting that “higher energy prices and persistent inflationary pressures continue to strain household and business finances.”
Personal lines saw notable recovery: personal auto reported a net combined ratio (NCR) of 91.8 for 2025—a 3.5-point improvement from the previous year—while homeowners’ NCR dropped to its lowest level since before 2014 despite active catastrophes like Los Angeles wildfires early in the year.
Some commercial lines remain challenged. Jason B. Kurtz of Milliman said that “litigation pressures and claims severity trends continue to result in elevated loss costs, constraining improvement in these segments despite broader industry strength.” For workers’ compensation insurance, Donna Glenn of NCCI said there was “an increase of about 5 points from the prior year” due primarily to higher loss and underwriting expense ratios.
Looking ahead, underlying growth is forecast at -3.7 percent for early 2026 but is expected to recover starting in 2027 as monetary policy decisions evolve with changing unemployment rates.
Triple-I Chief Insurance Officer Patrick Schmid warned that although replacement costs moderated after peaking two years ago they are projected to accelerate again through at least 2028: “replacement costs moderated significantly from their 2022 peak, but our forecasts show them re-accelerating through 2028 and eventually outpacing overall U.S. inflation.” Schmid also cautioned that “the industry faces a challenging road ahead with elevated catastrophe exposure, economic uncertainty, and persistent claims-cost pressures.”
To provide more detailed insights on individual segments beyond quarterly forecasts Triple-I has launched a monthly deep-dive series for members; among key findings were structural shifts such as declining standard market share as premiums move toward excess/surplus markets.
The Insurance Information Institute supports stakeholders including consumers, media and policymakers by providing resources in English and Spanish; it represents more than fifty member companies ranging from regional carriers to global firms; it established ties with The Institutes in November 2020; it aims to provide data-driven insights on risk education; hosts events promoting understanding of insurance issues; and ranks as a leading online source for insurance information according to the official website.
