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Triple-I/Milliman: US P/C �� Industry Navigates Recovery Following Years of Elevated Claims Costs and Economic Disruption

Personal and Commercial Property Lines Benefit from Moderating Inflationary Pressures

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For Immediate Release
Triple-I: Loretta Worters, lorettaw@iii.org
Milliman: Jeremy Engdahl-Johnson jeremy.engdahl-johnson@milliman.com

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MALVERN, Pa., May 15, 2026 – The U.S. property/casualty (P/C) insurance industry showed improving underwriting conditions in 2025 following several years of elevated catastrophe losses, inflation-driven claims costs, and post-pandemic economic volatility. The industry’s net combined ratio (NCR) reached its lowest level in more than a decade, reflecting improved underwriting conditions across many major lines. These findings are detailed in P/C Economics and Underwriting Projections: A Forward View, a members-only briefing from the (Triple-I) and .

“The industry’s 2025 results should be viewed in the context of the significant financial strain insurers have faced in recent years,” said Michel Léonard, Ph.D., CBE, chief economist and data scientist at the Triple-I. “Although conditions have stabilized somewhat, insurers continue to operate in an environment marked by elevated catastrophe risk, higher claims severity and ongoing economic uncertainty.”

“Real GDP growth slowed to 2.0% in the first quarter, while Consumer Price Index inflation remained elevated at 3.3% in March, remaining above the Federal Reserve’s long-term target,” Léonard said. “�� employment declined 1.8% year-over-year in March, underperforming the broader labor market and reflecting continued weakness in sector employment conditions. Meanwhile, higher energy prices and persistent inflationary pressures continue to strain household and business finances.”

Key Highlights

Underlying P/C growth for the first half of 2026 is forecast at -3.7%, down from 1.6% in 2025, with recovery expected in 2027 and 2028.
Replacement cost growth is projected at 2.1% for the first half of 2026, flat with 2025 levels, reflecting moderating claims severity pressures. Replacement costs are expected to converge in 2027 and to exceed broader U.S. inflation by 2028, reinforcing the need for continued pricing discipline across P/C lines.
Personal auto continued to improve in 2025, with an NCR of 91.8, improving 3.5 points from 2024. Net written premium growth slowed to 4.0%, the lowest since 2021, while underwriting conditions are expected to remain favorable.
Homeowners underwriting improved despite continued catastrophe activity, including the Los Angeles fires in the first quarter. The 2025 NCR was 88.1, the lowest in more than a decade, as replacement-cost pressures eased in 2025 and prior pricing actions helped offset catastrophe losses.
Underwriting conditions improved broadly across major lines, particularly in property-related areas, though profitability pressures remain elevated in several commercial segments.

"Replacement costs moderated significantly from their 2022 peak, but our forecasts show them re-accelerating through 2028 and eventually outpacing overall U.S. inflation," said Patrick Schmid, Ph.D., chief insurance officer at Triple-I. "While underwriting conditions have strengthened in some property lines, the industry faces a challenging road ahead with elevated catastrophe exposure, economic uncertainty and persistent claims-cost pressures."

General liability and commercial auto remain the only major lines above a 100 NCR, though gradual improvement is expected through 2026–2028.

Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, noted that general liability and commercial auto continue to face significant profitability challenges.

“Litigation pressures and claims severity trends continue to result in elevated loss costs, constraining improvement in these segments despite broader industry strength,” Kurtz said.

Workers’ compensation continues to perform strongly, with net combined ratios projected in the low 90s through 2026–2028, reflecting sustained underwriting profitability across the line.

“The preliminary reported combined ratio for calendar year 2025 is 91, an increase of about 5 points from the prior year,” said Donna Glenn, chief actuary at NCCI. “The change is primarily due to an increase in the loss and underwriting expense ratios,” she added. Read NCCI’s full for more information.

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About the �� Information Institute
Since 1960, the�� Information Institute��(Triple-I) has been the trusted voice of risk and insurance, delivering unique, data-driven insights to educate, elevate, and connect consumers, industry professionals, policymakers, and the media. An affiliate of��, Triple-I represents a diverse membership accounting for nearly 50% of all U.S. property/casualty premiums written. Our members include mutual and stock companies, personal and commercial lines, primary insurers, and reinsurers – serving regional, national, and global markets.

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