Despite devastating wildfires in California in the first quarter of 2025, the U.S. property and casualty (P&C) insurance industry expects full-year 2025 net combined ratios (NCR) to be the lowest in more than a decade, as the Atlantic hurricane season does not make landfall in the United States.
The findings are based on Insurance Economics and Underwriting Forecasting: A Forward-Looking Perspective, a new report from the Insurance Information Institute (Triple-I) and Milliman.
The report noted that the U.S. property and casualty insurance industry demonstrated resilience in 2025 despite severe regional catastrophes, ongoing tariffs and other geopolitical risks.
“Overall, the property and casualty insurance industry and the broader U.S. economy remain stable,” said Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I. “However, despite stronger-than-expected GDP growth in the third quarter, a closer look at the data suggests that the U.S. economy may be increasingly vulnerable to rising economic, political and geopolitical uncertainty. In particular, property insurance replacement costs are still likely to increase significantly in 2026, affecting overall property and casualty insurance performance.”
Leonard added that a rise in unemployment to a critical level of 5.0% over the next six months could trigger an economic contraction or even recession.
The report highlights that while profitability has peaked, revenue growth has begun to slow. Total property and casualty net premiums across all lines of business are expected to reach 5.9% in 2025, continuing to slow down compared with 2024.
Despite the damage caused by the Los Angeles fires in January, the homeowner net combined ratio is expected to be 99.6 points in 2025, unchanged from 2024.
Personal auto net combined ratio is expected to improve to 94.4 points in 2025, while net premium growth is expected to slow to 3.6%, the lowest level since 2020.
General liability and commercial auto are the only major lines expected to maintain a net combined ratio above 100 points, although a gradual improvement is expected from 2026 to 2027.
Workers’ compensation continues to perform strongly, with net combined ratios expected to be in the mid-80s to mid-90s by 2025 to 2027.
“We are on track to achieve our lowest net combined ratio in more than a decade, in part due to the U.S. not being affected by hurricane season and strong homeowner performance, even after the Los Angeles fires in the first quarter of 2025,” said Dr. Patrick Schmid, chief insurance officer at Triple-I.
“Personal lines premium growth remains solid, and the narrowing gap between personal and commercial lines performance points to cautious optimism for the industry’s outlook.”
Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, added: “General liability insurance faces continued challenges. Our net combined ratio in 2025 is expected to be similar to 2024, the worst in more than a decade. Losses are high, with the direct loss ratio in the third quarter being the highest in at least 25 years,” he said. “While conditions are likely to improve in 2026-2027, profitability remains a hurdle. Our general liability NCR expectations have increased following a challenging third quarter, reflecting continued pressure in the segment. While some lines are experiencing soft market conditions, total premiums have been growing, but not enough to keep up with loss trends. We expect additional premium growth will be needed to improve general liability profitability.”
Workers’ compensation is expected to continue to deliver good underwriting results through 2025, supported by stable net written premium trends, disciplined risk management and favorable prior year accident developments.
“NCCI’s latest loss ratio trends continue to trend downward,” said NCCI Chief Actuary Donna Glenn. “In the current environment, a small year-over-year decline is still expected.” Glenn pointed out, “While NCCI states have filed some rate hike requests, each state has its own story, and based on the latest data, NCCI does not expect an immediate reversal of current trends.”
