P&C Industry ‘Continues to Walk a Fine Line’ After Posting $11.5 Billion Underwriting Profit

• By: AnneMarie McPherson Spears
• September 11, 2025

Despite a turbulent start to 2025 marked by record-breaking wildfires, severe convective storms and ongoing inflation, the U.S. property & casualty insurance industry maintained underwriting profitability through the first half of 2025, according to a report from Verisk and the American Property Casualty Insurance Association (APCIA).

P&C insurers posted a net underwriting gain of $11.5 billion in the first half of 2025, nearly tripling the $3.8 billion recorded during the same period in 2024. Earned premiums grew 3.9% to $453 billion, and surplus levels climbed slightly to $1.08 trillion—close to historic highs.

The first quarter of the year delivered a significant blow to the industry as the Palisades and Eaton wildfires in California, along with severe convective storms across Texas and Georgia, pushed losses well above historical averages.

Those catastrophic events contributed heavily to first-quarter results, but the lack of major natural catastrophes in the second quarter helped stabilize losses. Further, incurred losses and loss adjustment expenses rose 2.1% through midyear, a slower pace than the 2.4% increase observed in 2024.

The combined ratio improved to 96.4% from 97.6% a year ago, demonstrating that underwriting discipline and more adequate rate levels are impacting industry-wide profitability.

“Net written premiums growth slowed to 1.9%. The lack of any significant natural catastrophes in the second quarter helped offset the record-breaking catastrophe losses related to the California wildfires and severe convective storms impacting Texas and Georgia earlier in the year,” said Robert Gordon, senior vice president, policy, research and international at APCIA. “However, the U.S. is now entering the height of hurricane and wildfire season, so time will tell if the industry is able to maintain underwriting gains through year-end.” 

Despite positive results, inflationary pressures and climate volatility remain persistent challenges. After a less active than predicted hurricane season so far, the report cautions that extreme weather events and perils are now persistent underwriting stressors.

“While some lines are showing signs of improvement, the broader industry continues to walk a fine line,” says Saurabh Khemka, co-president of underwriting solutions at Verisk. “Combined ratio has edged down slightly from this time last year, reflecting underwriting discipline, but escalating catastrophe losses—most notably January’s unprecedented California wildfires—underscore the volatility ahead.” 

Meanwhile, commercial insurance prices rose an average of 3.8% in the second quarter of 2025, down from the nearly 6% increase seen in each of the previous six quarters, according to the latest WTW Commercial Lines Insurance Pricing Survey. Carriers reported a 5.3% aggregate increase in the first quarter of 2025, continuing a gradual deceleration that began in late 2024.

Notably, commercial property prices decreased during the second quarter, a sign that capacity may be returning after multiple years of rate hardening. Most other major lines posted moderate to significant increases, with the steepest hikes in excess and umbrella liability and commercial auto, which saw double-digit increases.

Workers compensation, directors & officers liability and cyber insurance were either stable or experienced slight declines.

For homeowners, however, property insurance costs continue to climb, especially in regions recently struck by natural disasters. The Intercontinental Exchange Inc.’s Mortgage Monitor report for September 2025 found that the average annual insurance payment for a mortgaged single-family home rose 4.9% in the first half of 2025, reaching an average annual payment of nearly $2,370.

States such as North Carolina and South Carolina saw sharp increases in homeowners premiums following flooding from Hurricane Helene last year, while Los Angeles homeowners experienced a 9% rate jump in the first six months of the year in the aftermath of January’s wildfires.

Also, in Miami—the most expensive property insurance market in the U.S.—the share of mortgage holders relying on state-backed Citizens Property Insurance has fallen to 27% from 46% in just 18 months, thanks to legislation in Florida aimed at reducing frivolous insurance-related lawsuits and encouraging the return of private insurers.

AnneMarie McPherson Spears is IA news editor.