AM Best expects US P&C insurance underwriting profitability to persist in 2025

According to ratings agency AM Best, the US property and casualty (P&C) insurance industry is set to expand more rapidly than the wider economy in 2025 and is projected to sustain underwriting profitability for a second consecutive year.

The findings are based on Insurance Economics and Underwriting Projections: A Forward View, a joint analysis by the Insurance Information Institute (Triple-I) and Milliman, an actuarial and consulting firm known for its expertise in risk assessment and financial modelling.

The report, presented during a members-only briefing, expressed cautious optimism about the economic environment, assuming there are no significant changes in monetary or public policy.

“P&C economics and the US economy have outperformed expectations in 2025,” commented Michel Léonard, Ph.D., CBE, Chief Economist and Data Scientist at Triple-I. “Even though the tariffs’ impact is less severe than originally expected, the question remains whether the full negative impact has been avoided or simply pushed back to 2026.”

Léonard added: “The P&C industry is benefiting from stronger-than-expected underlying growth, pushing premium volume up, and replacement costs that remain below overall inflation. But ongoing risks, including tariffs, labour market softening, and persistent inflation, make the 2026 outlook especially important to monitor.”

The US P&C sector achieved underwriting profitability in 2024 for the first time since 2020, reversing the $21.3 billion underwriting loss of 2023. AM Best emphasised that this positive trend is expected to continue this year, although at a slightly reduced level.