Property/casualty sector to see strong premium growth continue

The property and casualty insurance sector will see strong premium growth continuing in 2025, according to Conning.

During a recent webinar, Conning analysts said that inflation, tariffs, interest rates and geopolitical factors are among the issues influencing the P/C market for the remainder of this year and going into next year.

The total P/C industry expects to see a 7% growth in premium in 2025, Conning said. Commercial property and commercial auto will experience higher premium growth rates, at 12% and 11% respectively. Homeowners insurance expects to see a 10% annual premium growth with personal auto insurance coming at about a 7% annual premium growth rate.

Shifting legal environment a concern

Insurers told Conning that the legal system is their greatest near-term and long-term concern. Alan Dobbins, Conning director of insurance research, said the shifting legal environment has created concerns for insurers.

An increasing number of “nuclear” verdicts, increased third-party litigation funding, more complex class-action suits, rising claims severity and a rise in product liability claims are all contributing to insurer concern over the litigation environment, he said.

Sustained fiscal strain also was cited by P/C insurers as a high long-term concern but a low concern in the short term. Elevated inflation, modest growth in gross domestic product, a cooling labor market and near-record federal debt levels all contributed to the concern.

However, insurers were mixed in their outlook of other issues impacting them in the near-term and long-term. Tariffs were a moderate concern in the short term but a lesser concern in the long term. Immigration policy was a low concern in the short term but a moderate concern in the long term.

2025 got off to a rough start for P/C

The year got off to a difficult start for P/C insurers, with the California wildfires resulting in $20 billion in insured losses. However, strong investment income continued to be a critical tailwind going into the year, Dobbins said.

Another factor impacting the auto insurance industry this year has been the cost of bodily injury and vehicle claims. Health care costs are rising, Dobbins said. The growth in vehicle repair costs has cooled since the supply chain crisis following the pandemic, but those costs are beginning to rise again.

Property construction costs also are beginning to trend higher after peaking in 2021-22.

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