U.S. personal lines rate increases return to pre-pandemic levels as markets stabilize

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US personal lines rate increases

Highlights

The average approved 2025 homeowners' rate increase falls to 8.3% from 13.5% in 2024, while auto slows to 3.7% from 9.7%.
U.S. homeowners' loss ratio drops by 9.2 percentage points from 74.8 in 2023 to 65.6 in 2025, with auto underwriting profit returning for the first time since 2020.
Despite stabilization, auto insurance rates in California, Nevada, New Jersey, and New York stay disproportionately high versus the national average, with state-level regulatory disparities influencing rate outcomes.

Approved rate changes moderate in 2025

As reported by AM Best, the average approved rate increase for homeowners' policies falls by 5.2 percentage points to 8.3% in 2025 from a year earlier, while private passenger auto rate increases slow to 3.7% from 9.7% in 2024.

The ratings agency says the change follows years of larger increases as loss frequency and severity pushed up filed rates across the U.S. personal lines market in 2023 and 2024. Its analysis, based on Best's State Rate Filings data, says the smaller increases in 2025 may signal stabilization after a period of sharper pricing action.

David Blades, associate director at AM Best, says the improvement for U.S. homeowners' insurers is driven by aggressive rate increases and better pricing sophistication in states that had produced the weakest results. He adds that underwriting performance in both homeowners and private passenger auto improves in part because of a broad push to bring premium levels more in line with risk.

Loss ratios improve, but state disparities remain

The improved industry performance is reflected in the U.S. homeowners' loss ratio, which declines by 9.2 percentage points from 74.8 in 2023 to 65.6 in 2025. AM Best says private passenger auto shows a similar pattern, with insurers in that segment generating an underwriting profit in 2024 for the first time since 2020, when results were distorted by COVID.

Even so, not all jurisdictions move in the same direction. Auto insurance rates in California, Nevada, New Jersey, and New York remain disproportionately high in 2025 despite the sharp decline in the national average, and AM Best says many states with the smallest rate changes between 2024 and 2025 still post aggregate loss ratios above the U.S. average over the past three years.

Dylan Catania, associate analyst at AM Best, says insurers in those states record more favorable underwriting results in 2025, and near-term rate filings will likely reflect that improvement. The report also says the effect of filed rate changes depends on approval and implementation processes that vary by jurisdiction, and that lower loss ratios in recent years correlate with subsequent filings for smaller rate increases.

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