U.S. Auto Insurance Rebounds in 2024, Homeowners’ Sector Faces Continued Challenges

Fitch Ratings reports that the U.S. personal insurance sector is poised for better underwriting performance in 2024. The previous years’ surge in claims severity due to high inflation and supply chain disruptions is subsiding, and substantial rate increases are driving rapid written premium growth. Despite enduring a third consecutive year of underwriting losses in 2023, with a combined ratio (CR) of 107%, the sector is improving.

Personal auto insurance, the largest product line in the U.S. P/C industry, saw net written premiums grow by over 14% in 2023 due to significant price hikes. The segment is expected to achieve break-even results or better in 2024, following substantial rate increases and strategic underwriting actions that improved the CR to 105% in 2023 from 112% in 2022.

In contrast, the homeowners’ insurance segment remains volatile. Despite sharp price increases expected to improve results in 2024, the segment faces ongoing challenges from natural catastrophe losses and higher reinsurance costs. The homeowners’ segment has reported underwriting losses in six of the past seven years, with a CR of 111% in 2023. Losses were exacerbated by numerous inland convective storms and increased costs for building materials and labor.