Predictions of an imminent collapse in the property and casualty insurance sector did not hold up against reality in 2024. Newly released financial results show that, despite a year marked by costly natural disasters, the industry delivered solid underwriting performance and returned to profitability.
The industry’s combined ratio—a key measure comparing losses and expenses to premium income—improved dramatically to 96.6% in 2024. That marks a sharp turnaround from 2023, when the combined ratio reached 101.8%, signaling a slight underwriting loss. The improvement is particularly notable given that 2024 saw major hurricanes, including Helene and Milton, which together generated an estimated $95 billion in insured losses.
Premium growth and improved underwriting results
Insurance premiums continued to climb in 2024, reflecting both rate adjustments and growing exposure. Direct written premium reached approximately $1.05 trillion, up from about $969 billion the year prior. Net written premium rose in tandem, increasing from roughly $858 billion to $929 billion.
Loss experience improved across the board. The industry’s loss ratio declined meaningfully, even after accounting for loss adjustment expenses. Expenses, meanwhile, remained relatively stable year over year. The net result was a swing from an underwriting loss in 2023 to an underwriting gain of roughly $27 billion in 2024.
Investment conditions also provided modest tailwinds. Bond yields increased during the year, supporting insurer investment income and contributing to overall financial stability.
When investment income is included, the industry’s operating ratio—an indicator of total profitability—remained around 7%. While healthy, this figure reinforces an important reality: insurance remains a steady, moderate-margin business. For context, average profit margins for Fortune 500 companies are closer to 13%.
Shifts within the insurance portfolio
Two notable trends emerged beneath the surface of the headline numbers.
First, personal lines insurance claimed a larger share of total industry premium than in the past. Historically, auto and homeowners insurance represented just under half of all premium. In 2024, that figure climbed to more than 51%. The shift reflects aggressive rate increases in personal auto and homeowners coverage across many states, which outpaced pricing changes in commercial lines.
Second, reported investment income included an unusually large spike in realized capital gains—nearly $79 billion industrywide. This figure was heavily influenced by one company: Berkshire Hathaway. During the year, Berkshire sold roughly $80 billion worth of Apple stock, an investment that had appreciated nearly eightfold since its initial purchase. Before the sale, Apple accounted for nearly 40% of Berkshire’s equity portfolio, making the transaction a major driver of industry-wide investment gains.
Reality versus the collapse narrative
Throughout 2024, headlines warned that climate-driven catastrophes were pushing the insurance industry to the brink. Some commentary suggested insurers would be unable to withstand escalating losses, forcing widespread market exits and runaway premium increases.
The financial results tell a different story. Insurers and reinsurers exist specifically to absorb catastrophe risk, and they do so by carefully managing exposure and maintaining defined catastrophe loss budgets. While climate volatility poses real challenges, the data from 2024 shows an industry that is adapting—not unraveling.
Looking ahead to 2025: clouds on the horizon?
As the industry moves deeper into 2025, political and regulatory developments may prove more disruptive than weather itself.
One emerging concern is the impact of staffing reductions at the National Oceanic and Atmospheric Administration (NOAA). Insurers rely heavily on NOAA’s weather observations, satellite data, and climate research to inform catastrophe models and capital planning. The loss of expertise and data quality could complicate risk assessment across the industry.
Another potential pressure point is litigation. The growing influence of plaintiff-side trial lawyers in policymaking circles raises the prospect of increased liability exposure, particularly for commercial and professional lines. Given the current administration’s mixed history with tort reform, insurers may need to prepare for a more challenging legal environment.
A resilient industry—entering uncertain terrain
Despite the challenges ahead, investor confidence remains intact. The S&P Composite 1500 Property & Casualty Insurance Index delivered a return of more than 7% this year, a strong showing amid broader market volatility.
The takeaway from 2024 is clear: the insurance industry demonstrated resilience, adaptability, and financial discipline in the face of severe catastrophe losses. However, as political uncertainty, regulatory shifts, and climate volatility converge, insurers may need to brace for a bumpier ride ahead.
The fundamentals are strong—but the road forward may not be smooth.
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