Insurance Information Institute (Triple-I) has officially published the results from its latest Issues Brief, which reveals that US personal auto insurance industry achieved its strongest underwriting performance in the post-pandemic era, recording a net combined ratio of 95.3 in 2024. Having said so, it continues to face challenges because of escalating legal system abuse and a stressful regulatory environment.
Talk about the whole report on a slightly deeper level, we begin from revelation of premium growth, which translates to how the industry maintained robust growth momentum with a net written premium increase of 12.8% in 2024, following 14.4% growth in 2023. The given numbers also mark two consecutive years of double-digit premium growth, and at the same time, outpaces the broader U.S. property/casualty (P/C) industry for again the second consecutive year.
Next up, Triple-I’s report revealed that direct incurred loss ratios improved dramatically, as they fell 21.7 percentage points from a peak of 86% in Q4 2022 to 64% by the end of 2024. Such a substantial improvement, on its part, should validate industry’s successful efforts to align pricing with risk and implement effective loss control measures.
Turning our attention towards its challenges and risks though, they include legal system abuse, which stems from increased billboard attorney involvement in claims and larger jury awards, each causing significant auto liability losses, along with defense and cost containment expenses. In fact, according to a 2024 Triple-I/Casualty Actuarial Society study, these expenses were found to be up from $76.3 billion in the year 2014 to $81.3 billion in 2023.
Apart from that, state regulatory processes were also deemed challenging. This was done after approval timeframes for rate filings were discovered to have literally grown 40% longer between 2010 and 2023. On top of it, the percentage of filings, receiving less rate impact than requested by carriers, had also increased by 10 percentage points, potentially limiting market availability and competitive pricing.
Rounding up highlights would be a piece of data, which talks to how, even though claim frequency remains below pre-pandemic levels, severity is steadily rise year-over-year, This was made evident by pure premium trends increasing cumulatively by 25.0 points from 2019 to 2024.
Founded in 1960, Insurance Information Institute’s rise up the ranks is a result of its ability to educate, elevate and connect consumers, industry professionals, policymakers, and the media, over various nuances attached with risk and insurance. The company is currently trusted by mutual funds, equity market-oriented companies, personal and commercial lines, as well as primary insurers and reinsurers.
Triple-I’s excellence in what it does can also be understood once you consider it accounts for nearly 50% of all U.S. property/casualty premiums written.
“While the improved 2024 underwriting performance is encouraging, we remain focused on several challenges facing the personal auto insurance industry,” said Sean Kevelighan, CEO of Triple-I. “The growing impacts of legal system abuse, driven by the exploitive tactics of billboard attorneys, combined with an increasingly complex regulatory environment, will continue to put pressure on the market. It’s essential for auto insurers to continue managing these evolving risks effectively to sustain profitable growth.”
