Despite a turbulent 2025 start, marked by devastating California wildfires and multiple severe convective storms, the US property & casualty (P&C) insurance industry successfully recovered through the third quarter, driven largely by sustained momentum in personal lines, which managed to offset Q1 losses, AM Best stated in a recent report.
By the end of September, the industry’s two largest sectors, homeowners/farmowners and private passenger auto, reported year over year improvements in direct incurred loss ratios, according to the report.
Through Q3 2025, AM Best noted that the P&C industry experienced a significant surge in net underwriting income, to approximately $35 billion from $3.7 billion in the same period of 2024.
“The homeowners/farmowners and private passenger auto lines of coverage experienced smaller direct premium gains through third-quarter 2025 compared with the double-digit growth through the same period in 2024. However, the continued premium growth reflects carriers still pushing for rate adequacy where they believe it is needed,” Helen Andersen, industry research analyst, AM Best, stated.
Loss ratio results for general liability lines diverged significantly in the first three quarters of 2025 compared to the same period in 2024, the report also noted.
Specifically, the direct loss ratio for the other liability (occurrence) line improved by 2.1 percentage points, while the other liability (claims-made) line’s loss ratio deteriorated by four percentage points.
Although the direct loss ratio for workers’ compensation worsened more than in the previous year, carriers writing this coverage still maintain favourable underwriting margins.
However, those margins have narrowed noticeably, which raises concerns about how long the decline in premiums can persist before underwriting results show a marked deterioration.
Overall, the property/industry’s direct loss ratio for the first nine months of 2025 demonstrated significant improvement, continuing the positive trend from the previous year when the ratio for the first nine months of 2024 was 5.2 points better than it was in 2023.
David Blades, associate director, Industry Research and Analytics, AM Best, said: “The relatively benign 2025 Atlantic hurricane season played an important factor in the property/casualty industry’s performance through the nine months of 2025, and these results provide optimism for full-year direct and net aggregate results.
“The improved industry direct loss ratio is also indicative of effective underwriting, pricing, claim and loss control measures of personal lines insurers stemming from more effective enterprise risk management practices.”
