The U.S.property and casualty (P&C) insurance industry saw significant improvement in 2024 compared to 2023, with momentum expected to continue in 2025 as higher interest rates drive stronger investment yields for insurers, providing a financial buffer against the volatility of weather-related losses, according to a new report from AM Best.In 2023, the U.S.P&C industry recorded an underwriting loss of $24.6 billion, which was reportedly offset by net investment income of $72.4 billion.

While underwriting losses moderated in 2024, AM Best has estimated that net investment income increased to $85.4 billion and is projected to reach $100.8 billion in 2025.Meanwhile, commercial lines underwriting results in 2024 benefited from positive rate momentum across most business lines, while personal lines saw improvements driven by pricing adjustments, claims-handling initiatives, and enhanced risk selection.The rating agency has projected a 7.3% increase in net premiums written for the P&C industry in 2025, following an estimated 10.0% rise in 2024.

Personal lines premiums are estimated to have grown by 12.9% in 2024, with a projected 9% increase in 2025.“Insurers are more determined than ever to achieve the rate increases necessary to address their calculated rate needs, particularly for lines such as private passenger auto and homeowners multiperil,” said Greg Williams, managing director at AM Best.As we reported recently, , aligned with reinsurance as well.

So this determination from insurers to sustain rate may have at least some positive ramifications for reinsurance capital over-time.However, challenges remain, according to Jacqalene Lentz, senior director at AM Best.Lentz observed that the severity of weather-related disasters has been compounded by insurers’ reliance on reinsurance, which has become more complex to manage as some reinsurers adjust their risk appetites for catastrophe-exposed personal and commercial property risks.

Additionally, social inflation, litigation financing, and macroeconomic pressures have continued to drive up commercial lines claims costs in 2024.“These headwinds could weaken prior-year loss reserve adequacy over the near term, especially for casualty lines of coverage,” Lentz explained..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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