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Best’s Market Segment Report: Weather, Reinsurance and Inflation Once Again Drive U.S. Property/Casualty Results

Severe weather-related losses, stubborn inflation and upward reinsurance pricing drove the U.S. property/casualty (P/C) sector’s net underwriting loss to a 10-year high of $38 billion in 2023, according to a new AM Best report.

The annual Review & Preview Best’s Market Segment Report, titled, “US Property/Casualty: Weather, Reinsurance and Inflation Drive Results – Again,” notes that despite the net underwriting loss, the P/C industry was able to post a sizeable pretax operating profit last year due to higher investment yields and a corresponding increase in net investment income. Balance sheets in 2023 were bolstered by gains in the equity markets as the insurance industry was able to recapture some of the 2022 unrealized loss positions, due to a bull market run in the second half of 2023.

The improvements in investment returns provided relief from the persistent pressures affecting the P/C sector’s underwriting performance. AM Best estimates approximately $65 billion in catastrophe losses impacting the U.S. P/C industry’s underwriting results. With only one hurricane making landfall in the United States, the vast majority of catastrophe losses in 2023 were from secondary perils. Last year included a record 28 single catastrophe events that each eclipsed the $1 billion loss mark, according to the National Oceanic and Atmosphere Administration (NOAA).

Since early 2022, personal lines insurers have been aggressively pursuing rate increases to reflect calculated rate needs more accurately, in the quest for an underwriting turnaround. However, regulatory constraints, inflationary pressures, and more frequent and severe weather-related events could hinder that progress. “The increasing volatility from what have been known in the industry as secondary perils raises the question of whether they will have a more primary role going forward,” said Sharon Marks, director, AM Best.

For three consecutive years, the private passenger auto segment has posted net underwriting losses. This segment has long been the leading line of P/C industry business. AM Best estimates that personal lines premium increased more than 12% in 2023 and another 10% coming in 2024. AM Best also expects improved underwriting and operating results for the P/C industry in 2024, owing to the commercial lines’ continued profitability, coupled with improvements in personal lines and in investment returns from higher yields and strong cash flow.

Commercial lines insurers collectively reported robust underwriting results through 2023; this sector is expected to continue on this path, driven by strong net premiums earned on the heels of prior year rate increases for most of the major commercial lines. In 2023, personal auto and homeowners’ results ended the year with an estimated combined ratio of 110%; commercial lines posted another strong year at 97.1%. Overall, the P/C industry finished the year at an estimated reported combined ratio of 103.7%.

To access the full copy of this market segment report, please visit

For a video discussion about this report with Dan Ryan, senior director, AM Best, please visit

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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