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Research highlighting the return from years of customer price rise, US property and casualty insurance companies almost doubled their revenues between 2023 and last year despite costly and extreme weather events.
A survey of companies that make up at least 97% of rating agencies’ property and casualties found that industry total post-tax profits rose to $171 billion last year, compared to $920 billion last year.
Hurricanes, fires and other disasters caused an estimated $320 billion in 2024 to lose around the world. In the US alone, five major hurricanes and other severe storms hit.
However, the data shows more than offsetting the big losses by insurers increasing premiums. Helen Andersen, AM’s top research analyst, told the Financial Times that the strong return rate was the result of an insurer’s “active push towards substantial fees and price increases.”
According to a separate survey by S&P Global Market Intelligence of US property and casualty insurance companies, the industry’s “combined ratio” — a measure of underwriting profits that considers claims and costs as a percentage of premiums — was the highest since 2013.
The total ratio of sectors fell from 101.6% in the previous year to 96.5% in the last year. Those less than 100% represent underwriting profit.
According to S&P, the insurance company has booked its first overall underwriting profit for home insurance since 2019.
The industry has tended to cut the costs of cover after prices rise, but some large US insurers have reassured shareholders with their first quarter investor appeal, saying it is unlikely to enter an aggressive price reduction cycle.
Allstate CEO Tom Wilson told analysts during a revenue call in May that the company saw opportunities for further fee rises in New York and New Jersey. He added that fallout from US tariffs can maintain consumer prices for longer.
For example, higher tariffs on auto parts and home building materials will increase the billing costs of the insurance company and supply it to the price.
However, some consumers, particularly in the state, have historically not been affected by extreme weather conditions such as wildfires and hurricanes, but have sometimes questioned the legitimacy of price increases that outweighed inflation.
Minnesota homeowner Daniel Beale told the Financial Times that his insurance company would like to increase the cost of this year’s annual policy from $1,958 to $3,793.
He shopped and found another insurance company, but his broker reports that many local clients told him they were asked to pay a higher price when renewing.
“I’m worried that my new provider will follow in the near future, and insurance needs to be a much larger cost to my family’s budget,” he said, “I understand that costs are rising, but such a drastic increase seems to be completely bounded.”
