Improved loss ratios, sturdy premium development, and decrease retention charges characterised the U.S. auto insurance coverage trade in 2024, in response to LexisNexis® Threat Options’ 2025 U.S Auto Insurance coverage Tendencies Report.
The report reveals that, “whereas a variety of insurers returned to profitability because the market softened,” the market was characterised by “file ranges of coverage purchasing and switching, legal professional illustration, claims severity, and rising driving violations.”
Fee will increase over the previous two years helped U.S. insurers handle profitability points, the report mentioned. Premium price will increase are starting to ease, rising 10 % in 2024, in contrast with a 15 % hike in 2023, as market circumstances soften. Insurer profitability is enhancing, with direct written premiums rising 13.6 %, to $359 billion, and incurred loss ratios stabilizing, enabling some carriers to pursue development methods and file for price decreases.
LexisNexis Threat Options additionally notes that tariffs might issue into how insurers think about price in 2025. Whereas the market wouldn’t anticipate the magnitude of exercise seen between 2022 by means of 2024, tariffs, in the event that they stick, might set off a ripple impact of average price will increase with implications throughout the trade.
Different traits recognized within the report embody:
- Bodily harm claims severity jumped 9.2 %, and property injury severity climbed 2.5 %, 12 months over 12 months. In distinction, collision severity fell 2.5 % for a similar interval.
- All driving violations elevated 17percent and driving violation charges throughout the US surpassed 2019 ranges.
- Coverage purchasing reached an all-time excessive, with greater than 45 % of insurance policies in drive shopped at the least as soon as by year-end.
The report additionally famous that electrical car (EV) transitions are introducing new dangers, as drivers shifting from inside combustion engine autos to EVs skilled a 14 percet rise in declare frequency.
“Auto insurers proceed to navigate a dynamic market,” mentioned Jeff Batiste, senior vp and normal supervisor, U.S. auto and residential insurance coverage, LexisNexis Threat Options. “The mixture of the market softening and a return to profitability presents a possible new chapter for the trade as insurers encounter a shopper base that’s extra keen than ever to buy offers.”
Report ranges of auto coverage switching translated to 2024’s new coverage development price of 17.7 % 12 months over 12 months. It additionally added momentum to the continuing buyer retention decline throughout the trade.
Since 2021, retention has decreased 5 proportion factors, to 78 %, leading to a 22 % improve in coverage churn, the report says.
“Traditionally, dropping even one proportion level is critical,” it says. “Nevertheless, towards a backdrop of heightened ranges of purchasing and switching exercise, insurers might wish to give attention to their retention methods, particularly when long-tenured clients are hitting the market.”
Study Extra:
Litigation Reform Works: Florida Auto Insurance coverage Premium Charges Declining
Private Auto Shines, Basic Legal responsibility Faces Headwinds in Q3 2025
Private Auto 2024 Underwriting Outcomes Greatest Since Pandemic
New IRC Report: Private Auto Insurance coverage State Regulation Techniques
