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Insurers and the Economy

Allstate, Aspen Initiative Seeks to Ease Trust Gap

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By Lewis Nibbelin, Research Writer, Triple-I

Insurance is a trust-based business. Providing safety and security in a risky, unpredictable world is the core function of our industry, which hinges on engendering consumer peace of mind.

Yet trust has become a scarce commodity as U.S. adults report successively lower average levels of trust by generation, with only 34 percent agreeing that “most people can be trusted” in 2018 compared to 46 percent in 1972. Trust in institutions appears similarly bereft, according to a global survey from SAS and Economist Impact that links the current $1.8 trillion protection gap to pervasive distrust in insurers.

To improve public and cross-sector relationships, Allstate and the Aspen Institute recently launched the Trust in Practice Awards, a grant program honoring non-profit organizations that support civic engagement, volunteering, and bridging differences with intergenerational participants. Backed by the Allstate finding that 74 percent of Americans remain optimistic about their community’s future, the initiative aims to broadly recoup trust by first establishing a strong foundation in neighborhoods, schools, and local organizations.

By reversing community distrust – which “undermines democracy, increases anxiety, and reduces personal freedom,” said Tom Wilson, Allstate president and CEO – the program could motivate collective action and resilience efforts on a larger scale, sending ripple effects of greater trust nationwide.

Fueling economic outcomes

Such effects can further stimulate measurable economic growth. A 2025 PwC survey indicates that introducing “trust or safety” features substantially increases engagement and purchase intent, with 72 percent more likely to engage, 68 percent open to new products, and 59 percent open to related merchandise.

Despite clear benefits, trust-building investments continue to face widespread scrutiny as a perceived barrier rather than facilitator of growth, the survey notes. Whereas AI, for instance, might quantifiably boost operational efficiency and reduce costs, pinpointing similar results from specific trust and safety measures can be more challenging, potentially leading organizations to overlook their importance.

Triple-I and SAS centered the insurance industry’s role in guiding these conversations in their 2024 research on ethical AI implementation, highlighting the technology as an opportunity for insurers to educate businesses less experienced with complex safety regulations. Prioritizing data privacy and integrity must occur alongside any innovation, the report emphasizes, to alleviate these concerns for consumers across all industries.

Transparent discussions are also key to combating legal system abuse, valued at $6,664 per family of four in added costs for basic goods and services. Commandeering the trust once associated with insurers, predatory “billboard” attorneys invest billions of dollars annually into advertising inflated settlements that often yield only marginal awards for the injured party, creating a more uncertain and deceptive litigious environment.

To bolster stakeholder education on the reality of legal system abuse, Triple-I founded an awareness campaign that includes multiple brick-and-mortar interstate billboards in Downtown Atlanta and a consumer guide, co-authored by Munich Re, that explains its economic impacts. A consumer microsite additionally promotes various state reform movements.

Trust is neither automatic nor unilateral. While legal reform momentum and cutting-edge insurance products can help restore affordable and widely available coverage, closing the protection gap will require ongoing coordinated efforts that can translate for modern audiences the industry’s dedication to putting people first.

Learn More:

‘Predict and Prevent’ Insurance Model Can Restore Consumer Trust: Nationwide

Survey: Homeowners See Value of Aerial Imagery for Insurers; Education Key to Comfort Levels

Human Needs Drive Insurance and Should Drive Tech Solutions

Triple-I Brief Highlights Legal System Abuse and Attorney Advertising

Georgia Targets Legal System Abuse

How Georgia Might Learn From Florida Reforms

Auto Insurance, Business Insurance, General Liability, Legal Environment

Claims Severity Drives Liability Insurance Losses

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By William Nibbelin, Senior Research Actuary, Triple-I

Economic and social inflation have added a staggering $231.6 billion to $281.2 billion in increased liability insurance losses and Defense and Cost Containment expenses in auto and general liability lines, a new report by Triple-I and the Casualty Actuarial Society.

The study – The Impact of Increasing Inflation on Liability Insurance 2015 – 2024 – says this structural rise in loss costs is amplified by what is broadly identified as legal system abuse.

The dual engine of increasing inflation

The analysis focuses on the total impact of increasing inflation determined through actuarial methods that are unable to decompose the precise contribution of economic inflation versus the role of what Triple-I characterizes as “legal system abuse” — policyholder or plaintiff attorney practices that increase costs and time to settle claims to the detriment of consumers, businesses, and the economy.  These practices include increasing litigiousness, third-party litigation financing, and soaring jury awards.

Claim severity powers losses

Across all lines analyzed, claim severity – not frequency – emerges as the primary driver of the escalating losses in liability lines of insurance. While the number of claims (frequency) has either generally declined or remained below pre-pandemic levels across the study period, the average cost per claim (severity) has soared. In commercial auto liability, for example, frequency has fallen dramatically since the pandemic, yet losses have still increased relentlessly because severity has risen 93.5 percent between 2015 and 2024.

Auto Liability

The report’s traditional focus on auto liability lines continues to show the most significant dollar-based impacts.

  • Personal auto liability: Increasing Inflation added between $91.6 billion and $102.3 billion to losses and DCC for the 2015–2024 period. This represents 8.7 percent  to 9.7 percent of losses and DCC for the period and an increase of 20 percent to 26 percent from the previous analysis on years 2014 through 2023. While the implied compound annual impact is lower than in the commercial sector, the dollar amount is huge due to the line’s immense underlying size. Personal auto severity has accelerated significantly post-2019, nearly tripling its compounded annual growth rate to 10.9 percent from 2019 to 2024. Premiums are only just beginning to rebound from pandemic-era lows, lagging the rise in losses.
  • Commercial Auto Liability: This line continues to sustain higher inflation rates in percentage terms. The total impact of increasing inflation reached $52.0 billion to $70.8 billion (22.6 percent  to 30.8 percent of booked losses). This represents an increase of 22 percent to 27 percent from the previous analysis.

A compelling cross-data set comparison with the Triple-I 2025 report, Review of Motor Vehicle Tort Cases Across the Federal And State Civil Courts, suggests that the “excess value” extracted by motor vehicle tort lawsuits—a clear measure of legal system abuse—was approximately $42.8 billion between 2014 and 2023. This quantitative finding suggests legal system abuse accounts for roughly one-third of the total Increasing Inflation effect in auto liability losses.

General liability lines

This year’s analysis expands to quantify the impact across broader general liability lines for the first time, revealing inflationary rates that are equally, if not more, dramatic in percentage terms.

  • Other Liability – Occurrence: Increasing inflation added between $83.4 billion and $103.3 billion to losses and DCC for the 2015–2024 period. This inflationary problem is comparable in dollar terms to personal auto liability, despite having only about one-third of the loss volume. Its implied annual impact of 3.7 percent on a paid basis is the highest of all the lines studied. Severity in this line grew at a compound annual rate of 6.8% from 2015 to 2024, far outpacing the Consumer Price Index All-Urban (CPI-U).
  • Product Liability – Occurrence: Increasing inflation added between $4.6 billion and $4.8 billion to losses and DCC for the 2015–2024 period. The smallest line examined exhibits the most dramatic severity trend with a compound annual growth rate of 22.3 percent between 2015 and 2024, resulting in a 512.5 percent severity increase overall. The effects appear to be accelerating, with the impact on Accident Year 2024 alone estimated at over 50% of that year’s booked losses.

For the “claims-made” categories of these liability lines (“other liability” and “product liability”), the study was unable to develop credible quantitative estimates due to shifts in business mix, data variability, and the inherent heterogeneity of the underlying risks. However, these lines have certainly not escaped the increasing inflationary environment.

Looking ahead

The data confirms a difficult truth: Even as general consumer price inflation (CPI-U) moderated to 3.0 percent in 2024—a reduction from the 2021-2023 average of 5.6 percent—the loss inflation in liability insurance remains structurally elevated. This means the economic tailwinds that temporarily exacerbated the problem are lessening, but the foundational issues of legal system abuse persist, locking in a higher rate of loss for the foreseeable future.

For consumers and businesses, this translates directly into higher premiums and a greater strain on their financial well-being. The challenge for insurers is the need to adapt to an elevated inflationary environment to effectively manage future liabilities. Recognizing and addressing the pervasive influence of legal system abuse is therefore essential for both managing risk and protecting consumers and businesses from ever-rising costs.

Triple-I continues to foster a research-based conversation around legal system abuse. For an overview of the topic and other helpful resources about its potential impact on insurers, policyholders, and the economy, check out our knowledge hub.

General Liability

Eliminating Friction From General Liability “Towers”

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By Michael Menapace, Triple-I Non-Resident Scholar

Michael Menapace is a professor of insurance law at Quinnipiac University School of Law, a Fellow of the American College of Coverage Counsel, and co-chair of the Insurance Practice Group at Wiggin & Dana LLP.

Brokers and companies routinely work to assemble multiple insurance policies to build towers of general liability (GL) coverage.  They now have a new option that eliminates much of the friction that can occur in underwriting and claims. 

For example, when a mass-casualty event occurs, insurers at the primary and lower excess layers may be incentivized to seek an early exit from the claim with as little claim expense as possible; as a result, they may overpay to resolve one claim while providing minimal support to the policyholder defending the other claims. Tension between layers also can arise when upper-layer carriers seek to place as much responsibility as possible on the lower-level carriers who are seeking to minimize their role. 

On the coverage side, policyholders can find that their traditional layers of excess coverage may be subject to differing terms, such as whether they provide for a defense.  Even when the excess tower contains follow-form policies, inconsistencies can occur when carriers take different positions on coverage, claim value, litigation/settlement strategy, and so forth. 

As a result of all of this is, gaps can open in the multilayer tower. For example, a recent claim that was the subject of a lawsuit arising from a large casualty loss in Florida involved one excess insurer seeking to enforce an anti-stacking provision that limited coverage for an event to one payment from the insurers equal to the highest policy limit among the tower participants.  In another claim, the higher-layer insurers argued that their layers were not triggered because the lower layer insurer had improperly exhausted. 

In addition to these examples, we’ve seen situations in which various excess layers contain different dispute resolution procedures, are subject to varying states’ laws, or have requirements of being resolved in differing jurisdictions. Brokers and policyholders can find managing their excess tower time-consuming and challenging at a time when they could be focusing on the defense of the mass casualty event or other large loss. 

Addressing these challenges

Chubb, Zurich, and National Indemnity (the reinsurance arm of Berkshire Hathaway) have formed a new facility that seeks to eliminate some of these challenges. It provides a single layer of commercial umbrella coverage up to $100 million, typically following a $10 million primary layer.  Many of the terms will be familiar to brokers and policyholders: Coverage A for Bodily Injury and Property Damage, Coverage B for Personal and Advertising Injury, and an Optional Coverage C for Auto and Employers Liability. 

A unique feature in the United States, the program has “single-desk” underwriting style so that brokers can work with one point of contact for the underwriting of the entire layer of excess coverage.  Flexibility is also an advantage because the program is being written on a surplus lines basis, which means more discussions can be had on terms and conditions. 

Traditionally, general liability coverage is written on an occurrence basis, which can keep the insurer on the risk for decades after the policy period expires.  Insurers price that long-tail exposure into premiums.  This new program can be more affordable because it is written on a claims-made basis, while including a multi-year extended reporting period to protect the policyholder.  This can save the policyholder money when compared to traditional programs.

Just like underwriting, claims will be handled with single point of contact, with one of the carriers taking the lead.  Once the claim is tendered and being defended, the fact that this group of leading insurers is on the risk means the collective experience of some of the industry’s biggest, most sophisticated carriers is at the disposal of the insured.  If a coverage dispute does arise, the policy provides for resolution via a single arbitration that applies consistent procedures and the law of a single state – again, streamlining the process and resolution for the policyholder.

While some of the features are offered in the London market, this provides brokers and policyholders with a U.S.-based solution with added benefits and features.

Homeowners Insurance, Risk-Based Pricing

Illinois Lawmakers
Reject Risk-Based
Pricing Challenge

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By Lewis Nibbelin, Research Writer, Triple-I 

Illinois insurers narrowly avoided increased government involvement in insurance pricing as state legislators rejected “an extreme prior-approval system found nowhere else in the country,” according to a joint statement from the American Property Casualty Insurance Association, the National Association of Mutual Insurance Companies, and the Illinois Insurance Association.

If approved, the bill would have given regulators the authority to block rate change and order refunds from insurers for premiums deemed excessive, effectively generating “fewer choices and greater instability,” the statement continued.

While calls for the bill began in July, following homeowners’ insurance rate hikes, Illinois has a history of legislative challenges to actuarially sound pricing. Similar legislation in Louisiana passed that same month, amid record rate filing rejections in Pennsylvania and two California lawsuits accusing insurers of deliberately underinsuring policyholders to maximize profits.

Such trends underscore pervasive misunderstandings surrounding risk-based pricing, the practice under which insurers offer different prices for the same coverage based on risk factors specific to the insured. Without it, insurers could not adequately cover mounting natural catastrophe losses, inflationary pressures, and other rising costs, leading to an insufficient policyholder surplus to pay claims. When surplus falls below a certain threshold, insurers must raise premium rates, adjust their coverage availability, or, in extreme cases, become insolvent.

Under this pricing methodology, Illinois benefits from better coverage affordability compared to the national average and a competitive insurance market of more than 200 operating insurers.

“Illinois has a very stable insurance marketplace,” said Triple-I CEO Sean Kevelighan. “Restrictive legislation could lead to a California-like regulatory environment that would impact insurance affordability and availability in the state, rather than help consumers as intended.”

Rather than involve themselves in the complexity of insurance pricing, policymakers in Illinois and elsewhere would do a greater service to their constituents by exploring and investing in risk reduction through cost-saving mitigation and resilience investments. The property/casualty insurance industry can be a valuable partner in such beneficial approaches.

Learn More: 

New Illinois Bills Would Harm — Not Help — Auto Policyholders

Resilience Investment Payoffs Outpace Future Costs More Than 30 Times

L.A. Homeowners’ Suits Misread California’s Insurance Troubles

California Insurance Market at a Critical Juncture

Insurers and the Economy

Tariffs, Shutdown Cloud 2026 Insurance Outlook

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By Lewis Nibbelin, Contributing Writer, Triple-I

Current U.S. tariff policies – especially those targeting materials essential for repairing and replacing property after insured events – can complicate assessing and predicting risk. The future of these policies will depend on pending court rulings, creating even more uncertainty for insurers and their customers.

This uncertainty is compounded by a paucity of federal data during the current U.S. government shutdown.

“Normally, as we wrap up Q3, we have enough data as economists, policymakers, and business leaders to start thinking about what the year will look like by the end of it,” said Dr. Michel Léonard, Triple-I Chief Economist and Data Scientist, in a recent interview with Insurance Thought Leadership (ITL) – like Triple-I, an affiliate of The Institutes. “That’s not the case right now.”

In a typical year, Léonard explained, quarter-over-quarter GDP progresses minimally, facilitating more confident quarterly projections. Ongoing trade agreement ambiguity, however, means economists are “flying blind about GDP at the moment.”

Such uncertainty also influences inventory management behaviors, as companies up and down the supply chain that rely on imported goods have decided to stockpile ahead of tariff enactments at a record pace. Though replacement costs continue to rise more slowly than overall inflation, consumers will likely face rising costs as supplies dwindle, which could disrupt the P&C insurance industry’s positive momentum heading into next year.

Personal auto performance, for instance, saw considerable improvement, but reflected consumers purchasing vehicles to circumvent later post-tariff prices, potentially leading to “less growth in the second half of the year and certainly next year,” Léonard said.

Paul Carroll, ITL editor-in-chief, added that companies may delay investing in domestic manufacturing as tariff uncertainty persists, thereby further delaying potential economic boosts. He and Léonard agreed that these factors in combination suggest the full impact of tariffs will require more time to unfold.

Despite an unclear 2026 forecast, Léonard emphasized that insurers appeared to avoid “the worst-case scenarios” this year, demonstrating a “resilient U.S. economy, both in terms of growth and inflation.”

“We’re going to end the year most likely in a better place than we expected, and we should be very happy about that,” he concluded.

A complete transcript of their discussion is available here.

Auto Insurance, Legal Environment, Market Conditions, Regulation

Florida Governor Touts Auto Insurance Rebates, Tort Reform Success

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By Jeff Dunsavage, Senior Research Analyst, Triple-I

Florida Gov. Ron DeSantis announced last week that state regulators have secured nearly $1 billion in premium refunds for Progressive auto insurance policyholders in the state, due to cost savings achieved through litigation reform.

DeSantis, who signed sweeping tort reform legislation bills into law in 2022 and 2023, said the refunds are a direct result of declining litigation expenses in Florida’s auto insurance market.

“Florida was really considered a litigation hellhole by a lot of folks,” DeSantis said. “That contributed to consumers having to bear more costs with respect to auto insurance.”

He pledged Insurance Commissioner Mike Yaworksy is negotiating with other major auto carriers for similar reimbursements to their customers.

Mark Friedlander, Triple-I’s director of communications, told Spectrum News Florida that reduced lawsuit expenses has enabled auto insurers to lower average costs and, in some cases, return premium to customers.

“When you take that out of the equation — all of those abusive lawsuits — this brings down the expenses, and that in turn gets passed along to the consumer,” Friedlander said. “The consumer wins with legal system reform.”

Learn More:

Litigation Reform Works: Florida Auto Insurance Premium Rates Declining

Florida Senate Rejects Legal-Reform Challenge

What Florida’s Misguided Investigation Means for Georgia Tort Reform

Florida Bills Would Reverse Progress on Costly Legal System Abuse

Florida Reforms Bear Fruit as Premium Rates Stabilize 

How Georgia Might Learn From Florida Reforms

Resilience Investments Paid Off in Florida During Hurricane Milton

Florida Homeowners Premium Growth Slows as Reforms Take Hold, Inflation Cools

Catastrophes, Disaster Preparedness, Disaster Resilience, Floods, Hurricane, Risk Management, Roof Condition, Severe Convective Storm, Tornado, Wildfire, Wind

Resilience Investment Payoffs Outpace Future Costs More Than 30 Times

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By Lewis Nibbelin, Contributing Writer, Triple-I

Every dollar invested in disaster resilience today can save communities up to $33 in avoided economic costs, according to new research from the U.S. Chamber of Commerce, Allstate, and the U.S. Chamber of Commerce Foundation.

Building on their 2024 finding that such investments save $13 in benefits, the report detailed the burgeoning toll of increasingly frequent and severe natural catastrophes across the United States, underscoring a need for stronger collective action to mitigate climate risk.

Invest Now, Save Later

After experiencing the fifth consecutive year of 18 or more billion-dollar disasters in 2024, the United States further drove the second costliest half-year ever for global insured losses from natural catastrophes in 2025 with January’s devastating wildfires in Southern California. Though reflecting a troubling “new normal,” the report demonstrates how resilience funding can help stabilize local economies and protect lives and jobs, regardless of the scale or type of disaster.

Modeling scenarios for five disaster types – hurricanes, tornadoes, wildfires, droughts, and floods – the study revealed that high resilience investments may cut GDP losses by billions, with reduced funding leading to significantly higher long-term costs across all scenarios.

For hurricane-prone areas, which can grapple with lasting disruptions to housing, education, and other basic infrastructure, the study noted that higher investment could prevent the loss of $13.2 billion and more than 70,000 jobs.

Emphasizing the “smart, cost-saving” efficacy of disaster mitigation, the report concluded that “preparedness is not just a safety measure – it’s a local economic development strategy.”

“Preparedness is as much about plans as it is people,” added Rich Loconte, senior vice president and deputy general counsel for government and industry relations at Allstate. “It’s supporting a local nonprofit to retain its employees and keeps its doors open after a disaster, working with civic leaders to develop recovery plans that minimize rebuilding costs, and educating community members on proactive investments that help better weather storms.”

Risk Reduction in Practice

Beyond identifying the broad impact of disaster preparedness, the report also provides actionable insights for local leaders who aim to boost community resilience but are unsure where or how to start. Recommendations for disaster preparation include:

  • Risk-Informed Design: Adopt and enforce hazard-resistant building codes, such as those that meet the Insurance Institute for Business & Home Safety’s FORTIFIED standards. Update zoning and land use planning according to the latest risk data.
  • Data-Based Decisions: Improve access to risk data to inform, track, and assess the success of disaster mitigation efforts.
  • Dedicated Resilience Funding:Create a local fund for disaster mitigation to ensure consistent investment and expedite post-disaster recovery.
  • Public Engagement: Launch risk awareness campaigns to facilitate individual and organized participation in preparedness and raise insurance take-up rates.
  • Stakeholder Partnerships: Coordinate cross-sector and multi-jurisdictional resilience strategies to maximize benefits.

A survey released in tandem with the report shows that most resilience stakeholders – encompassing emergency managers, community planners, government officials, and other risk experts –  believe public-private collaboration needs improvement, with more than half of respondents highlighting insufficient resource allocation and unclear decision-making processes as leading causes for poor coordination.

While most indicated state and local governments must play a major role in disaster preparedness, response, and recovery, 58 percent of respondents additionally underscored the federal government as crucial at every phase, particularly for financial assistance. As numerous community resilience projects hang in limbo following the Trump Administration’s cancellation of $882 million in federal grants, it is imperative for all beneficiaries of disaster resilience to help develop sensible solutions for predicting and preventing losses.

“As the cost and economic toll of disasters continue to increase, leaders at all levels of government should know that investments in infrastructure resilience will go a long way in protecting and preparing local communities,” said Marty Durbin, senior vice president of policy at the U.S. Chamber of Commerce. “Resilience investments reduce costs and speed up recovery. The faster a community bounces back, the faster jobs and economic growth return.”

Learn More:

Study Supports Defensible Space, Home Hardening as Wildfire Resilience Tools

Can a Fire-Prevention Device Be a “Gateway Drug” to Home Resilience?

JIF 2025: Federal Cuts Imperil Resilience Efforts

Why Roof Resilience Matters More Than Ever

Study Touts Payoffs From Alabama Wind Resilience Program

Louisiana Senator Seeks Resumption of Resilience Investment Program

Weather Balloons’ Role in Readiness, Resilience

BRIC Funding Loss Underscores Need for Collective Action on Climate Resilience

Careers and Employment, Insurance Industry

Chart of the Week, “U.S. GDP and Insurance Growth Bolstered by Hispanic and Latino Community.”

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Chart of the Week (COTW), "U.S. GDP and Insurance Industry Growth Bolstered by Hispanic and Latino Community

Even as Latinos continue to play an essential role in the U.S. economy, Latino representation of insurance industry workers fell slightly in 2024, to 14.9 percent, from 15.3 percent in 2023, according to a recent Triple-I “Chart of the Week”. The highest representation of this demographic was 18.3 percent of insurance sales agents, with claims and policy processing clerks following closely, at 17.7 percent. The lowest representation was among underwriters, at 8.8 percent.

The chart — “U.S. GDP and Insurance Industry Growth Bolstered by Hispanic and Latino Community.”  — is based on data from the Bureau of Labor Statistics and the U.S. Latino GDP report.

From 2019 to 2023, Latinos drove 30.6 percent of U.S. GDP growth despite making up only about 20 percent of the overall U.S. population (by 2024) and 19.4 percent of the workforce. Latinos generate a GDP of $4.1 trillion by 2023 (up from $3.7 trillion in 2022), sufficient to rank alone as the fifth-largest GDP in the world. The Latino consumer market, with $2.7 trillion in consumption in 2023, has a buying power larger than the economies of powerhouse states such as Texas ($2.58 trillion) and New York ($2.17 trillion).

The National Association of Hispanic Real Estate Professionals predicts that Latinos will be the largest group of homebuyers in the country by 2030. Homeownership for this group is 9.8 million households, with 238,000 new Latino owner households added in 2023 alone —the largest increase of any racial or ethnic group for the second consecutive year. Data analysis indicates there may be more than 30 million new Latino drivers hitting the roads through 2050. Latinos are also the fastest-growing group of entrepreneurs, according to the Stanford Latino Entrepreneurship Initiative.

Effectively engaging this formidable market creates immense opportunity for the insurance industry. However, only just over half of the respondents to a survey conducted by Marsh and the Latin American Association of Insurance Agencies (LAAIA) said they believed their companies were invested in attracting Hispanic customers. Nearly two-thirds of respondents said insurers do not employ enough Latinos. Only 14 percent thought insurers employed an adequate number. Moreover, 84 percent agreed that Latinos are underrepresented in the senior management of most insurance companies.

Efforts to create a diverse and inclusive workforce can drive greater client satisfaction and loyalty.  As Amy Cole-Smith, Executive Director for BIIC/ Director of Diversity at The Institutes, has pointed out, “this isn’t just about equity —it’s about unlocking growth and staying competitive in a changing market. When the insurance workforce reflects the diversity of the market, we’re in a stronger position to build products that meet people where they are.”

Business Insurance, Business Risk, Risk Management, Workers Compensation

NCCI Sees Underwriting Profitability Continuing for Workers Comp Line

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By Lewis Nibbelin, Contributing Writer, Triple-I

Updated industry data for the 2024 workers compensation market confirmed the line’s 11th straight year of underwriting gains, according to the recent National Council on Compensation Insurance (NCCI) report 2025 in Sight, 2024 in Review. The report – a reevaluation of preliminary analysis presented at the NCCI Annual Insights Symposium (AIS) in May – also projected continued gains in 2025.

These results were highlighted at a members-only briefing from the Triple-I and Milliman.

Prior-year figures

While net written premium fell from 2023 by 3.2 percent, workers comp private carriers enjoyed a 2024 combined ratio of 86.1 percent – a 13.9 percent underwriting gain. Such gains, combined with the 2024 investment gain of 9.8 percent, resulted in an overall operating gain of 23.7 percent, marking the eighth consecutive operating gain exceeding 20 percent and the most profitable period over at least the last three decades, the report noted.

Contrary to lower AIS estimates, lost-time claim frequency declined by 6 percent and indemnity claim severity rose by 5 percent last year. The 2024 medical claims severity estimate remains unchanged, at a 6 percent increase from 2023.

Ongoing stability

Midyear results indicate 2025 will post another profitable year, with a net premium volume similar to that of 2024. Using National Association of Insurance Commissioners (NAIC) Quarterly Statement data, NCCI reported the following findings:

  • Direct written premium decreased 1.9 percent through the first half of 2025, compared with the first half of 2024.
  • While 2025 bureau loss costs are expected to decrease by 6.1 percent, payroll through the first half of 2025 increased by roughly 5 percent over the prior year.
  • The private carrier direct loss ratio for the first half of 2025 is 50 percent – two points higher than the direct loss ratio during the same period of 2024.
  • As loss ratios at year end tend to fall slightly lower than second quarter loss ratios, the year-end 2025 net combined ratio will likely range from 85 to 93 percent.

“If this holds, it will represent 12 consecutive years of combined ratios under 100 for private carriers,” said Donna Glenn, chief actuary at NCCI.

As emerging data is collected and evaluated throughout the ratemaking season, NCCI’s initial analysis will continue to evolve. Potential economic headwinds, including recession concerns and tariff and immigration policy uncertainties, add to the unknowns. Tariffs, for instance – especially on medical equipment and pharmaceuticals, which are already subject to rising medical inflation – could further propel the costs behind workplace injury claims, making proactive risk management more imperative.

Greater insight into these trends and the overall 2025 workers comp performance will be available at the NCCI’s next AIS in May 2026.

Learn More

NCCI AIS 2025: Key Insights on Workers Comp

Workers Comp Premium, Loss, Market Trends Support Its Ongoing Success

NCCI Event Shines a Light on Workers Comp

Insurers and the Economy, Regulation, Risk Management, Risk-Based Pricing

Triple-I Brief Explains Benefits of Risk-Based Pricing of Insurance

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By Jeff Dunsavage, Senior Research Analyst, Triple-I

“Risk-based pricing” is a basic insurance concept that might seem intuitively obvious when described – yet misunderstandings about it regularly sow confusion and spark calls for government intervention that would likely do consumers more harm than good.

Simply put, it means offering different prices for the same level of coverage, based on risk factors specific to the insured person or property. If policies were not priced this way, lower-risk drivers would necessarily subsidize riskier ones.

Confusion ensues when actuarially sound rating factors intersect with other attributes in ways that can be perceived as unfairly discriminatory. A new Triple-I Issues Brief sorts out the reasons for such confusion and explains why legislative involvement in insurance pricing is not the answer to rising premiums. In fact, the report says, such involvement would tend to drive premiums up, not down.

Worries about equity

Concerns have been raised about the use of credit-based insurance scores, geography, home ownership, and motor vehicle records in setting home and car insurance premium rates. This confusion is understandable, given the complex models used to assess and price risk. To navigate this complexity, insurers hire teams of actuaries and data scientists to quantify and differentiate among a range of risk variables while avoiding unfair discrimination.

Triple-I’s brief shows how one frequently criticized rating factor for auto insurance – insurance-based credit scores – effectively tracks collision claim frequency.  Drivers with the worst 10 percent of scores have twice as many collision claims as the best 10 percent. The sophisticated tools actuaries and underwriters use ensure fair, accurate pricing, and insurers do everything they can to see that all valid claims are paid on time and in full.

Climate and inflation

Areas that were once less vulnerable to certain natural perils – such as wildfire and hurricane-related flooding – increasingly are being affected by these costly events. Furthermore, more people have been moving into at-risk areas on the coasts and in the wildland-urban interface (WUI), putting more property into harm’s way.

Insurance pricing must reflect these increased risks to maintain policyholder surplus – the funds regulators require insurers to keep on hand to pay claims. In some states, this increased risk – combined with regulatory decisions that make it hard to raise premium rates to the levels needed to adequately meet it – has forced some insurers to reduce their exposure and not write as many policies and even withdrawing from states completely. In these states, not only has homeowners’ coverage become less affordable – in some cases, it has also become less available.

Another factor driving up premiums is inflation. As material and labor costs rise, the cost to repair and replace damaged homes and vehicles increases. If premium rates don’t reflect these increased costs, insurers would quickly exhaust their policyholder surplus. If their losses and expenses exceed their revenues by too much for too long, they risk insolvency.

A role for governments

Policymakers naturally want to address the impact of rising costs – including insurance premiums – on their constituents. A good start would be to help reduce risk by modernizing building codes and incorporating resilience into their infrastructure investments. Reduced risk and less costly damages would, over time, translate into lower premium rates.

Governments also can work with insurers and other stakeholders to incentivize homeowners to invest in mitigation and resilience. The Strengthen Alabama Homes program is a great example of one such collaboration between state government and the insurance industry that has measurably improved results and is beginning to be imitated by other states.

Learn More:

Calls for Insurance-Price Legislation Would Hurt Policyholders, Not Help

Easing Home Upkeep to Control Insurance Costs

Study Touts Payoffs From Alabama Wind Resilience Program

Insurance Affordability, Availability Demand Collaboration, Innovation

Outdated Building Codes Exacerbate Climate Risk

L.A. Homeowners’ Suits Misread California’s Insurance Troubles

Data Granularity Key to Finding Less Risky Parcels in Wildfire Areas

Calif. Risk/Regulatory Environment Highlights Role of Risk-Based Pricing

Actuarial Studies Advance Discussion on Bias, Modeling, and A.I.

Accurately Writing Flood Coverage Hinges on Diverse Data Sources

Latest research and analysis