Despite heavy losses following the California wildfires and multiple severe convective storms during first-quarter 2025, favorable results in the succeeding two quarters led to improved direct incurred loss ratios year over year for the U.S. property/casualty industry through the first nine months as well as for the segment’s largest two lines of business - homeowners/farmowners and private passenger auto, according to a new AM Best report.

These results are detailed in a new Best’s Special Report, titled, “3Q25 Snapshot: Personal Lines Momentum Continues to Drive P/C Underwriting Result Improvement,” and the data is derived from companies’ third-quarter statutory statements received and aggregated for the property/casualty industry as of Dec. 10, 2025. Through the third quarter of 2025, according to the report, the property/casualty industry experienced a significant surge in net underwriting income, to approximately $35 billion from $3.7 billion in same period of 2024.

“The homeowners/farmowners and private passenger auto lines of coverage experienced smaller direct premium gains through third-quarter 2025 compared with the double-digit growth through the same period in 2024. However, the continued premium growth reflects carriers still pushing for rate adequacy where they believe it is needed,” said Helen Andersen, industry research analyst, AM Best.

The report notes that the general liability lines of coverage produced divergent loss ratio results through the first three quarters of 2025, as compared with 2024, with the other liability (occurrence) line’s direct loss ratio experiencing a 2.1-percentage point improvement while the other liability (claims-made) line’s loss ratio deteriorated by four percentage points. While the workers’ compensation line’s direct loss ratio through third-quarter 2025 deteriorated worse from the same prior-year period, carriers writing this coverage continue to enjoy favorable underwriting margins. However, those margins have narrowed noticeably, raising the question of how much longer the premium decline can continue before underwriting results reflect noticeable deterioration.

Overall, the property/industry’s direct loss ratio for the first nine months of 2025 showed strong positive momentum from a year ago when the ratio for the first nine months of 2024 was 5.2 points better than it was in 2023.

“The relatively benign 2025 Atlantic hurricane season played an important factor in the property/casualty industry’s performance through the nine months of 2025, and these results provide optimism for full-year direct and net aggregate results,” said David Blades, associate director, Industry Research and Analytics, AM Best. “The improved industry direct loss ratio is also indicative of effective underwriting, pricing, claim and loss control measures of personal lines insurers stemming from more effective enterprise risk management practices.”

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=361510.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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