www.insurancemarketandnews.com
The US property and casualty insurance industry is entering a more demanding phase as premium growth loses momentum while claim costs and complexity continue to rise. A new analysis from Boston Consulting Group (BCG) points to a widening performance gap between insurers that maintain underwriting discipline and those struggling to adapt.
US P&C insurers delivered an average annual total shareholder return of about 18% between 2021 and 2025, ahead of the 15% global insurance average. However, returns slowed in 2025 as softer pricing and weather-related losses weighed on performance.
Personal auto has largely recovered from its earlier profitability problems. Its combined ratio improved to 92% in 2025, compared with 112% in 2022. Yet rising repair expenses, medical costs and claim frequency could put renewed pressure on margins as insurers compete more aggressively for business.
Homeowners insurance presents a different challenge. Although the segment recorded an 88% combined ratio in 2025, BCG cautioned that favorable catastrophe conditions helped produce the result. Severe convective storms generated more than $50 billion in insured losses in each of 2023, 2024 and 2025, surpassing traditional hurricanes as a leading source of US catastrophe losses.
Casualty insurers face growing exposure to social inflation, litigation financing and so-called nuclear verdicts. The report counted 135 nuclear verdicts in 2024, while third-party litigation financing has reached an estimated $15 billion to $18 billion market.
BCG also identifies artificial intelligence as an increasingly important competitive factor. Leading insurers are applying AI to underwriting, claims, pricing and distribution, while companies remaining at the pilot stage risk falling behind.
The image is an illustration created with AI for general context.
Source: Boston Consulting Group
For the latest insurance news, market movements, regulatory developments, and expert analysis, turn to Insurance Market and News.
