The Insurance Information Institute has reported that the U.S. personal auto insurance industry achieved its strongest post-pandemic performance in 2024, with a net combined ratio of 95.3. However, the institute warned of ongoing challenges related to legal system abuse and regulatory issues, as said in a recent press release.
According to the Insurance Information Institute’s June 12 press release, the sector’s net combined ratio improvement signifies a major recovery from previous underwriting losses. The report highlights that net written premiums grew by 12.8% in 2024, following a 14.4% increase in 2023, marking two consecutive years of double-digit premium growth surpassing the wider property/casualty sector. Additionally, direct incurred loss ratios decreased significantly from a peak of 86% in Q4 2022 to 64% by the end of 2024, indicating successful pricing and loss control strategies.
The Issues Brief warns that legal system abuse remains a significant challenge for the industry. According to a study conducted with the Casualty Actuarial Society, litigation tactics involving billboard attorneys and rising jury awards have inflated claim costs and affected profitability, increasing auto liability losses and defense costs by an estimated $76.3 billion to $81.3 billion between 2014 and 2023. CEO Sean Kevelighan emphasized that these trends continue to pressure the personal auto market despite recent gains.
The Triple-I’s June 12 press release also addresses regulatory headwinds facing the sector. It notes that average approval times for rate filings have increased by 40% from 2010 to 2023, complicating insurers’ ability to adjust pricing based on risk assessments. Furthermore, there has been an increase in rate filings receiving less than requested adjustments over this period, potentially limiting competition and innovation within the industry. While claim frequency remains below pre-pandemic levels, claim severity has continued to rise with pure premium trends up by 25 points since 2019.
The Insurance Information Institute (Triple-I), an affiliate of The Institutes since its founding in 1960, is recognized as a leading source of insurance research and analysis. According to their official website, Triple-I represents nearly half of all U.S. property/casualty premiums written and includes members from mutual and stock insurers as well as reinsurers serving regional, national, and global markets.
