US Personal Lines Insurers Ask for Less Rate After Period of Catch-Up

It appears as though auto and home insurers have caught up, appropriately matching premium to risk in their portfolios.

According to a new report from insurance industry rating agency AM Best, rate increases for homeowners and private passenger auto insurance dropped in 2025 following several years of significant rate increases as insurers’ underwriting profits wound up in the red.

In 2025 the average approved rate increase for homeowners insurance was 8.3% compared with 13.5% in 2024. For auto, rates went up 3.7% in 2025 versus up 9.7% in 2024.

For five of the six years from 2018 to 2023, homeowners insurers netted underwriting losses but 2025 results “showed continued improvement as the industry produced an underwriting profit of more than $16 billion for the homeowners line, the first such profit in five years,” thanks to no hurricane land-falls and a “more willing” reinsurance market, AM Best said.

The graph above shows average direct loss ratios and the average approved rates for 10 states with the highest 2024 homeowners direct premiums written, representing about 54% of the homeowners market. Lower direct loss ratios reflected better catastrophe management, tighter underwriting, and adjusted risk appetites, AM Best said.

In auto, AM Best credits carriers’ “refined underwriting techniques and technological enhancements” was credited in improving loss and expense ratios to reduce the need for large rate increases. Auto insurers in the aggregate recorded an underwriting gain of nearly $29 billion in 2025 after posting a loss of nearly $17 billion just two years prior.