Personal Auto Insurance Sees Strongest Underwriting Year Since COVID Disruptions

The personal auto insurance market in the U.S. delivered its strongest underwriting performance since the onset of the pandemic, according to a recent Triple-I report. With a 2024 net combined ratio of 95.3, the segment not only returned to profitability but also outperformed the broader property and casualty insurance sector in underwriting results for half of the past two decades.

A surge in premium growth—14.4% in 2023 and 12.8% in 2024—played a key role in the recovery. This rebound followed a dip in 2020 when driving activity plummeted due to COVID-19 restrictions. Since then, driving has normalized, and premiums have adjusted upward in response to inflation in vehicle prices, parts, and repairs. These inflationary pressures have had a strong historical correlation with insurance rate changes.

Loss experience also improved markedly in 2024, with the direct incurred loss ratio dropping by 21.7 points since late 2022. However, the recovery has been uneven: auto physical damage improved more than auto liability, leading to the widest gap in over a decade. Liability claim severity continues to rise, in part due to what insurers describe as legal system abuse, which includes growing litigation, larger jury awards, and increased attorney involvement.

Finally, regulatory hurdles remain a concern. A recent Insurance Research Council study highlighted growing complexity in rate approval processes from 2010 to 2023, with more delays and a lower rate of full approval for requested increases. This evolving landscape may affect insurers’ ability to respond quickly to cost trends, ultimately influencing consumer access to competitively priced auto insurance.