S&P Global Market Intelligence forecasts a significant return to underwriting profitability for the U.S. property/casualty (P/C) insurance industry in 2024. The combined ratio is expected to drop to 99.2, largely driven by improvements in private passenger auto insurance, with a projected combined ratio of 98.4, down from 104.9 in 2023.
Divergent Views on Profitability
While S&P GMI predicts a return to profitability, other analysts, including those from the Insurance Information Institute and Milliman, foresee continued underwriting losses for the industry in 2024, with recovery not anticipated until 2025. The conflicting projections highlight uncertainty in the market’s near-term outlook.
Impact of Weather Catastrophes
Despite the positive forecast for auto insurance, homeowners’ insurance remains challenged by weather-related catastrophes. The homeowners’ combined ratio is projected at 107.3 for 2024, reflecting ongoing losses despite a slight improvement from 2023’s 110.9 ratio.
Commercial Lines Outlook
Commercial lines are expected to remain profitable, with a combined ratio of 96.0 projected for 2024. However, the sector faces risks, particularly in workers’ compensation, which could affect future underwriting results. Overall, the property/casualty insurance industry is anticipated to benefit from higher interest rates, bolstering net income through better investment returns.