The “gap is closing” between commercial lines and personal lines underwriting results as the insurance industry overall is expected to continue its run of premium growth and improved underwriting results over the next 2 years.
According to a report from the Insurance Information Institute (Triple-I) and Milliman, P/C underlying growth is forecast to be above overall U.S. GDP growth in 2025 and 2026 as “lower interest rates continue to revive real estate and contribute to higher volume for homeowners insurance and commercial property.”
“Commercial lines continue to have better underwriting results than personal lines, but the gap is closing,” said Dale Porfilio, Triple-I’s chief insurance officer. “The impact from natural catastrophes such as Hurricane Helene in Q3 2024 and Hurricane Milton in Q4 2024 significantly impacted commercial property.
“The substantial rate increases necessary to offset inflationary pressures on losses have driven the improved results in personal auto and homeowners,” he added.
The net combined ratio for P/C is expected to show an improvement over 2023 of 2.2 points to 99.5 in 2024. Net written premium increased 9.5%.
According to the report, personal lines is projected to turn in a 2024 net combined ratio of 98.8, which is 6.1 points better than 2023. Homeowners projected NCR is 104.8, another 6.1-point improvement even in the face of a bust hurricane season.
Meanwhile, commercial property’s projected 2024 NCR of 91.2 is 3.3 points worse than 2023. Property was adversely affected by with Hurricane Milton. General liability projected 2024 NCR of 103.7 is 3.6 points worse than 2023, as social inflation — “or more specifically, legal system abuse and nuclear verdicts,” said Emma Stweart, a chief actuary at Lloyds — takes a toll, with the possibility of more reserve deterioration in the future.
Commercial auto continues its unprofitable streak, said Jason B. Kurtz, principal and consulting actuary at Milliman.
“The 2024 direct incurred loss ratio through Q3 is the highest in over 15 years. As a result, we have increased our expectations for 2025 and 2026 net written premium growth, as the industry responds to the worsening 2024 performance,” he said.
Insurance Economics and Underwriting Projections: A Forward View is a quarterly report offered exclusively to Triple-I members and Milliman customers.
Topics
Profit Loss
Hurricane
Property
Property Casualty
Interested in Hurricane?
Get automatic alerts for this topic.
