US Insurance Industry Shows Signs of Recovery, Boosted by Capital Gains

The US insurance industry is beginning to show signs of surplus recovery driven by capital gains in the first half of 2024, according to a report by Verisk and The American Property Casualty Insurance Association (APCIA). First-half industry gains are estimated at $95 billion, though adjusting for a significant one-time capital gain by a single insurer brings the total to approximately $45 billion. 

While insurers still face challenges, including inflation and the impact of natural catastrophes, the industry's surplus has stopped declining. However, surplus levels have not yet returned to early 2022 figures, and ongoing risks from extreme weather events and cyber threats may require higher surplus levels in the future. 

"Insurers are still recovering from significant underwriting losses in recent years," said Robert Gordon, senior vice president of policy, research, and international at APCIA. "Insurers' underwriting income swung from a $22.6 billion loss in the first half of 2023 to a $4.7 billion gain at 1H2024. Commercial lines have been profitable, while personal lines are still struggling." 

The report highlighted several key industry trends for the first half of 2024.

• Insurers wrote $463 billion in premiums, up from $420 billion during the same period in 2023. 
• Earned premiums grew by 11 percent, reaching $436 billion. 
• The combined ratio improved to 97.6 percent from 104.2 percent in 2023, signaling a return to underwriting profitability. 
• The policyholders' surplus increased slightly to $1,070 billion, compared to $1,014 billion at the end of 2023. The rate of return on surplus rose to 9.1 percent from 3.6 percent. 

The report also noted the rise of smaller, more frequent weather events, contrasting with the larger catastrophe events typically seen later in the year. "Insurers must prioritize actionable insights and analytics to understand these evolving risks," said Saurabh Khemka, copresident of underwriting solutions at Verisk. 

The data, derived from insurers' regulatory filings, covers about 91 percent of US property-casualty business.