AM Best, the credit rating agency, has reported that average annual rate increases for US private passenger motor and homeowners insurance in 2025 have moved closer to levels seen before the pandemic period.
The company notes that this follows several years in which both lines saw substantial increases, driven by higher claims costs and elevated loss activity.
AM Best’s data shows that the average approved rise for homeowners insurance declined by 5.2 percentage points year on year to 8.3% in 2025, while private passenger motor insurance recorded an average approved increase of 3.7%, down from 9.7% in 2024.
AM Best Associate Director David Blades said: “The improvement experienced by US homeowners’ insurers has been driven by both aggressive rate increases and enhanced pricing sophistication in states that had been generating the most adverse results.” He also added: “PPA and homeowners underwriting results have made progress, partly because of a concerted push for premium adequacy.”
AM Best links these changes to developments in insurer filings and broader pricing adjustments tracked through its Best’s State Rate Filings dataset. According to AM Best’s analysis, the upward pressure on premiums seen in 2023 and 2024 was largely associated with increased claims frequency and severity across the US personal lines market.
The company observes that 2025 has seen a clear moderation in the scale of rate rises, aligning with improved underwriting outcomes recorded in the preceding period. AM Best also highlights that homeowners insurers have experienced stronger performance overall, with the sector loss ratio improving by 9.2 percentage points, moving from 74.8 in 2023 to 65.6 in 2025.
For private passenger motor insurance, AM Best reports a broadly similar pattern, although results have not been uniform across all states. The company notes that insurers in this segment returned to underwriting profit in 2024 for the first time since 2020, when results were affected by pandemic conditions.
Despite the national slowdown in rate increases, AM Best points out that states including California, Nevada, New Jersey and New York continued to show comparatively elevated motor insurance pricing in 2025. It also notes that over the past three years, jurisdictions with smaller changes in average rate increases between 2024 and 2025 have often recorded combined loss ratios above the national average.
Dylan Catania, Associate Analyst at AM Best, said: “Because insurers in these states experienced more favourable underwriting results in 2025, rate filings in the near future will likely reflect those positive results.”
AM Best further explains that the impact of approved rate changes is shaped by both regulatory approval processes and how quickly insurers implement adjustments after approval, which differs between jurisdictions.
The company adds that recent patterns show a link between lower loss ratios and reduced size of subsequent rate filings, which it views as a possible indicator of more stable underwriting conditions ahead.
