U.S. P&C posts best combined ratio

The U.S. property-and-casualty industry’s 2025 result looks strong on the surface because the core underwriting math improved across the sector. AM Best said the industry’s combined ratio improved 3.7 points to 92.2 in 2025, the best level in a decade, while Verisk and the American Property Casualty Insurance Association estimated a roughly $63 billion net underwriting gain for private U.S. P&C insurers. That matters because the combined ratio is the industry’s basic profitability gauge: it compares claims and expenses with premiums earned. A ratio below 100 means underwriting profit before investment income; a ratio above 100 means insurers are paying out more in claims and expenses than they collect in premium. AM Best and Triple-I both tied the 2025 improvement to stronger pricing and better underwriting conditions after several years of catastrophe losses and inflation-heavy claims costs. (news.ambest.com) ### Why did 2025 improve so much? Catastrophe losses were lower, and pricing stayed firm. AM Best said catastrophe losses accounted for an estimated 7.6 points on the 2025 combined ratio, down from 8.8 points in 2024, while net earned premiums rose 6%. Verisk said limited catastrophe impacts supported profitability, and Insurance Business, citing market reports, said tighter pricing and stronger underwriting helped drive the decade-low combined ratio. (news.ambest.com) Personal auto was one of the clearest repair stories. Triple-I and Milliman said personal auto’s net combined ratio improved to 91.8 in 2025, 3.5 points better than 2024. That follows a broader rebound in personal lines after carriers spent the past several years pushing through rate increases to catch up with loss costs. (news.ambest.com) ### If results were this good, what is still worrying insurers? Replacement costs and casualty severity remain the main pressure points. Triple-I and Milliman said replacement cost growth is projected at 2.1% for the first half of 2026, flat with 2025, and warned that costs are expected to converge only gradually before exceeding broader U.S. inflation again by 2028. Insurance Business said replacement costs and casualty losses are “setting the stage” for 2026’s next test. (iii.org) Liability-driven lines also remain less forgiving than the headline numbers suggest. AM Best said 2025’s strong performance was offset in part by persistent pressure on claim costs and liability-driven volatility, while Triple-I and Milliman projected underlying growth would fall to negative 3.7% in the first half of 2026 from positive 1.6% in 2025. (iii.org) ### Does this change how carriers buy technology and services? Stronger industry results do not automatically make insurers looser buyers. Trade coverage from Insurance Business and Insurance Asia said carriers are still under pressure to show workflow-level returns from technology spending, especially in claims and underwriting, even as AI and modernization budgets continue. (secure.businesswire.com) Guidewire and Duck Creek have both leaned into that shift in recent coverage by emphasizing governed deployment and human accountability, particularly in claims and underwriting workflows. That lines up with a market in which procurement teams can point to better headline results but still ask vendors to prove measurable gains in a specific operating step. This is an inference based on the vendor and trade coverage, not a direct quote from a single carrier procurement executive. (insurancebusinessmag.com) ### Where should readers watch next? Triple-I and Milliman said 2026 will depend on catastrophe activity, replacement-cost trends and casualty pressures, while Insurify projected national auto insurance rate increases would slow to 5% in 2025 but remain closer to 10% in states including Florida and New York. That means the next read-through will come from midyear loss-cost updates, state pricing data and carriers’ second-quarter commentary on casualty severity and claims inflation. (iii.org) (morningstar.com)