Overview of the 2024 Financial Performance
Verisk, a leader in data analytics and technology solutions, alongside the American Property Casualty Insurance Association (APCIA), a principal national trade body for home, auto, and business insurers, has projected the US property and casualty insurance sector to generate a substantial net income of $170 billion for 2024. However, it is crucial to acknowledge that after adjusting for over $70 billion in capital gains realized by a single insurer, the industry’s revised net income stands at approximately $100 billion, still markedly higher than 2023’s $40.9 billion.
Key Improvements and Financial Metrics
Verisk’s report underscores significant advancements across various crucial areas within the industry. Notably, the underwriting gain for 2024 is estimated at $24.8 billion, a remarkable turnaround from the $21.8 billion underwriting loss recorded in 2023. This marks the first full-year underwriting gain in four years, reflecting a concerted industry-wide effort to better align premiums with risk levels faced by insurers.
Insurers wrote $926 billion in premiums throughout 2024, an increase from the previous year’s $851 billion. Earned premiums also rose by 9.8%, reaching $895 billion, continuing the upward trajectory of the prior year. The combined ratio, a vital indicator of profitability, improved significantly from 101.6% in 2023 to 96.4% in 2024.
Additionally, the net written premiums increased by $29.8 billion in the latter half of 2024, reflecting a growth of 6.9% compared to the same period in 2023. The policyholders’ surplus also rose to $1,082 billion at the end of 2024, up from $1,013 billion at the close of 2023.
Challenges and Natural Disasters
Despite facing challenges in the second half of 2024 from natural calamities like Hurricanes Helene and Milton, the industry demonstrated robust growth. Total incurred losses and loss adjustment expenses increased to $634.4 billion in 2024, up from $622.4 billion in 2023.
In terms of investments, the sector produced net investment gains of $163.6 billion, a significant improvement over the prior year’s total of $73.4 billion.
Industry Insights and Future Outlook
Saurabh Khemka, co-president of Underwriting Solutions at Verisk, commented, “While many of the loss drivers from 2023 persisted into 2024, the industry’s ability to align premiums more closely with required levels has resulted in an underwriting gain for the first time since 2020.”
He further noted, “The broader market continues to face challenges, particularly in property coverages where natural catastrophes remain a pressing issue. The increasing frequency and severity of these events reflect shifting weather patterns and evolving risk landscapes, underscoring the growing complexity of underwriting in the property/casualty space.”
Robert Gordon, senior vice president of policy, research, and international at APCIA, highlighted, “The property casualty insurance sector stabilized in 2024, shifting from a nearly $22 billion net underwriting loss to a nearly $25 billion net underwriting gain. Net income for the year improved significantly, although approximately 40 percent resulted from capital gains of atypical stock sales by a multinational conglomerate owning several insurers.”
Looking ahead, insurers are expected to continue leveraging technology that enhances data-driven decision-making and underwriting accuracy to sustain profitability. However, they will need to balance pricing, risk selection, and claims management strategies amidst ongoing uncertainties.
