The Insurance Information Institute and Milliman announced on May 14 that the U.S. property/casualty insurance industry experienced better underwriting conditions in 2025 after several years of high catastrophe losses, inflation-driven claims costs, and economic volatility following the pandemic. The industry’s net combined ratio reached its lowest point in over a decade, signaling improvements across many major lines.
This update is significant because it follows a period of financial strain for insurers due to elevated risks and ongoing economic uncertainty. Michel Léonard, Ph.D., CBE, chief economist and data scientist at the Insurance Information Institute (Triple-I), said, “The industry’s 2025 results should be viewed in the context of the significant financial strain insurers have faced in recent years. Although conditions have stabilized somewhat, insurers continue to operate in an environment marked by elevated catastrophe risk, higher claims severity and ongoing economic uncertainty.”
Léonard also said that real GDP growth slowed to 2.0% in the first quarter while inflation remained above target levels at 3.3% as of March. He noted declines in insurance employment compared to other sectors: “Insurance employment declined 1.8% year-over-year in March, underperforming the broader labor market and reflecting continued weakness in sector employment conditions. Meanwhile, higher energy prices and persistent inflationary pressures continue to strain household and business finances.”
Key findings from Triple-I/Milliman include a forecasted -3.7% underlying P/C growth for early 2026 with recovery expected later; replacement cost growth holding steady but projected to outpace overall U.S. inflation by 2028; improvements seen particularly within personal auto (NCR at 91.8) and homeowners lines (NCR at 88.1), even as catastrophe activity persisted such as fires near Los Angeles.
Patrick Schmid, Ph.D., chief insurance officer at Triple-I said: “Replacement costs moderated significantly from their 2022 peak, but our forecasts show them re-accelerating through 2028 and eventually outpacing overall U.S. inflation…the industry faces a challenging road ahead with elevated catastrophe exposure, economic uncertainty and persistent claims-cost pressures.” General liability and commercial auto remain above a net combined ratio of one hundred but are expected to improve gradually through coming years.
Jason B. Kurtz of Milliman said: “Litigation pressures and claims severity trends continue to result in elevated loss costs, constraining improvement in these segments despite broader industry strength.” Workers’ compensation remains strong with ratios projected around ninety-one through upcoming years according to Donna Glenn of NCCI who said: “The preliminary reported combined ratio for calendar year 2025 is ninety-one…primarily due to an increase in the loss and underwriting expense ratios.”
The Insurance Information Institute supports stakeholders including consumers, media and policymakers by providing resources—such as data-driven insights on risk—in English and Spanish; it represents more than fifty insurance company members spanning regional to global carriers; hosts events on risk management; established ties with The Institutes since November twenty-twenty; aims to educate professionals via its website—which ranks as a leading online source for insurance information—according to the official website.
