U.S. Insurance Industry Shows Signs of Resilience Despite Continued Headwinds in 2024

Core Insights - The insurance industry is projected to have a net income of $170 billion for 2024, with an adjusted estimate of$100 billion after accounting for over $70 billion in capital gains from one insurer [1] - The underwriting gain for private U.S. property/casualty insurers reached$24.8 billion in 2024, a significant recovery from a loss of $21.8 billion in 2023, marking the first full-year underwriting gain in four years [2][5] Financial Performance - Premiums written by insurers increased to$926 billion in 2024 from $851 billion in 2023, while earned premiums grew by 9.8$895 billion [5][8] - The combined ratio improved to 96.4% in 2024 from 101.6% in 2023, indicating enhanced profitability [5][8] - The policyholders' surplus rose from $1,013 billion at the end of 2023 to$1,082 billion at the end of 2024 [5][8] Underwriting and Losses - Incurred losses and loss adjustment expenses increased by 1.9% in 2024, a notable decrease from the 10.1% increase in 2023 [5][8] - The second half of 2024 saw a net underwriting gain of $21.0 billion, a significant increase from$3.8 billion in the first half of the year [6] - Despite improvements, the industry continues to face challenges from natural catastrophes, with 2023 being the second worst year for catastrophic losses since 1950 [3][4] Market Dynamics - The personal auto insurance sector showed improvements due to necessary premium adjustments, while commercial auto premiums did not match the growth seen in 2023 [3] - Insurers increased loss and loss adjustment reserves at the end of 2024 to address escalating adverse developments from legal system abuse and social inflation [4] - The market is recalibrating in response to prolonged underwriting losses, necessitating a balance between pricing, risk selection, and claims management strategies [3]