The United States personal auto insurance industry recorded its strongest underwriting performance in the post-pandemic era, achieving a net combined ratio of 95.3 in 2024. However, the sector continues to face challenges due to increasing legal system abuse and a complex regulatory environment, as reported by the Insurance Information Institute (Triple-I) in a new Issues Brief.
"While the improved 2024 underwriting performance is encouraging, we remain focused on several challenges facing the personal auto insurance industry," said Triple-I CEO Sean Kevelighan. "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."
According to Triple-I's report, the personal auto insurance sector showed improvement across various metrics in 2024. The industry experienced robust premium growth with a net written premium increase of 12.8%, following a 14.4% growth in 2023. This marked two consecutive years of double-digit premium growth, surpassing the broader U.S. property/casualty (P/C) industry for the second year in a row.
Loss performance also saw significant improvements with direct incurred loss ratios dropping from a peak of 86% in Q4 2022 to 64% by the end of 2024. This reflects successful efforts by the industry to align pricing with risk and implement effective loss control measures.
Despite these gains, ongoing challenges persist which could affect future results. Legal system abuse has been identified as a key issue, with increased involvement from billboard attorneys leading to higher auto liability losses and defense costs ranging from $76.3 billion to $81.3 billion between 2014 and 2023.
Additionally, state regulatory processes have become more challenging over time, with approval timeframes for rate filings extending by 40% from 2010 to 2023. The percentage of filings receiving less rate impact than requested by carriers has also increased by ten percentage points.
Another concern is that while claim frequency remains below pre-pandemic levels, severity continues to rise annually, with pure premium trends increasing cumulatively by 25 points from 2019 to 2024.
Since its founding in 1960, Triple-I has been recognized as a trusted source for risk and insurance insights. As an affiliate of The Institutes, it represents diverse membership accounting for nearly half of all U.S. property/casualty premiums written.