From the perspective of insurance carriers, a four-year trend of superior growth is taking an unfavorable turn, giving way to more moderate levels of increase, according to a recently released report.

But premiums will still grow, according to Swiss Re Institute’s Q2 2025 report, “U.S. Property & Casualty Outlook: Sunny skies but pack an umbrella,” which forecasts overall U.S. P/C insurance industry direct written premium growth rates of 5.5 percent for 2025 and 4 percent for 2026—just about halving the 9.6 percent growth rate recorded for 2024.

The report points out that U.S. commercial lines insurers and personal lines insurers took turns over the last four years posting historically strong growth rates. Commercial lines saw double-digit premium jumps in 2021-2022, and then personal lines had double-digit growth in 2023 and 2024.

Looking at the last five quarters of statutory information from S&P Global, Swiss Re Institute shows growth dipping from just over 10 percent in the first and second quarters of 2024 to just under 7 percent in first-quarter 2025. A line graph of the personal lines and commercial lines growth rates for each of the first quarters dating back to 2021 shows the recently rising personal lines curve and the lower commercial lines graph now “converging to the mid-single digits.”

“Rate gains are easing across many commercial and personal lines where insurers assess pricing to be adequate and are targeting expanded market share in spite of elevated uncertainties,” wrote Thomas Holzheu, Chief Economist Americas, Swiss Re Institute, one of the authors of the report in a LinkedIn message about the findings. “We see headwinds to premium growth building, which may be compounded if exposure growth slows in case of an economic downturn,” the LinkedIn post said.

The report, however, cites some factors potentially moving carrier top lines in the other direction—namely, tariffs and reduced net migration, which “could put upward pressure on goods prices and wage inflation, requiring, potentially, premium rate adjustments to compensate.”

Still, “while this may be partly offset by slower GDP/exposure growth, premiums are heavily influenced by the underwriting cycle,” the report stressed.

Wrote Holzheu on LinkedIn: “Good times create conditions for their own demise as companies compete for greater market share.”

Concluding the chapter on premium growth, the report says, “Despite elevated uncertainties, our core growth message is unchanged: industry growth remains solid but is decelerating from a historically elevated four-year period.”

Related article: $1 Trillion! 2024 P/C Industry Direct Premiums At Record Level

Profits to Continue

The report also includes favorable forecasts of underwriting profit, investment income and overall returns-on-equity. ROEs are projected at 10 percent for 2025 and 2026, down slightly from 11.3 percent in 2024.

After the best combined ratio result in a decade—97.2 in 2024—Swiss Re Institute forecasts overall U.S. P/C industry combined ratios of 98.5 and 99 for 2025 and 2026. The report notes the resilience of industry, exemplified by a sub-100 combined ratio for first-quarter 2025 (99) amid high-severity events like the January California wildfires.

The report includes a line-by-line summary of direct written premium and loss ratio changes in first-quarter 2025 compared to first-quarter 2024, revealing that personal auto continued to be a driver of overall industry improvement. The first-quarter 2025 direct loss ratio (excluding LAE) was 5 points lower than a year ago (67 for auto liability and 54 for auto physical damage).

The homeowners insurance direct loss ratio, on the other hand, deteriorated 44 points to 101 in the first quarter of 2025, according to a chart in the report.

Excluding catastrophe-affected property lines, Swiss Re Institute reports that the first-quarter industry loss ratio was 2 points lower than a year ago, suggesting that “historically strong underlying (non-catastrophe) underwriting results” are offsetting persistent elevated catastrophe activity.

Still the report points to several underwriting profit headwinds:

• “Rapid rate deceleration across several lines” in the first half of this year are fueling Swiss Re Institute’s “expectation that underwriting performance will begin to deteriorate.”
• The personal auto line, which is driving improved margins, “faces higher uncertainty” stemming from “the outcome of tariff decisions.” The report cites the unclear impact on the vehicle production supply chain (especially cars produced in Mexico and Canada.

“There are already signs of acceleration in claims components such as used car prices and repairs.”

“Despite the uncertainties, personal auto insurers resumed rate cuts following a pause after the early April tariff announcement,” the report says.

On the commercial lines side, the report says that “the seven-year hard market” is continuing to “wane but with differentiation.” Citing information from the Marsh Global Insurance Market Index for first-quarter 2025, the report notes that “aggregate commercial insurance prices declined for the first time since 1Q18,” with property, financial lines and professional liability pricing down and general casualty up in response to the pressures of social inflation on claims costs.

(Editor’s Note: After the publication of the Swiss Re Institute’s report, Marsh announced its second-quarter Global Insurance Market Index, revealing that overall commercial insurance rates fell 4 percent, on average, in the second quarter of 2025, following a 3 percent decline in first-quarter 2025.)

Related articles: Global Q1 Commercial Insurance Rates Drop 3%, but US Casualty Bucks the Trend (April 2025); Global Commercial Insurance Rates Drop 4% but Casualty Rates Are Rising: Marsh (July 2025)

Citing information from a Dowling & Partners second-quarter 2025 analysis that shows E&S premium growth dropping below 10 percent for the first time in five years, the report highlights the potential for further deceleration in excess and surplus lines premium growth. This could be fueled by higher admitted market capacity and weaker property pricing, the Swiss Re Institute report says.

Small vs. Large

A footnote about Marsh’s rate data referenced in the Swiss Re Institute report notes that the Marsh data is weighted toward large accounts. In an Appendix to the report, Swiss Re Institute summarizes data from CIAB that includes more smaller accounts, showing commercial property rate hikes plummeting to about 3 percent in Q12025 from roughly 10 percent in Q12024. “Although rate levels differ across surveys, the trend of deceleration across most lines and acceleration in casualty is consistent,” Swiss Re Institute concluded.

Executives discussing market conditions on recent earnings conference calls also addressed the nuances of small vs. large account business.

Commenting on property, Gregory Toczydlowski, president of the Business Insurance segment of Travelers, and Robert Berkley, chief executive officer of W.R. Berkley Corp., both commented on softening they’re seeing on the shared and layered coverage for large accounts. For smaller accounts, “it’s not that there isn’t competition, but it pales in comparison to the larger end of town,” Berkley said.

Turning to casualty, Berkley noted that rate increases—along with social inflation trends—impact the full spectrum of accounts. Still, a “down-market” shift by plaintiffs’ attorneys hasn’t been dramatic, which means that smaller accounts “tend to be a little bit more insulated” on the loss side. The rate environment for these accounts, also “tends to be a little bit more sticky,” he said.

Summarizing, Berkley said that in the property market, “you get the greatest feeding frenzy” around larger accounts (the most insurance market competition) early on during a competitive market cycle. The bifurcation “applies to casualty, too. So, the rates are going up on the larger accounts in casualty. But the smaller and middle market is following and it tends to be stickier.”

Separately, responding to a question about commercial transportation and general casualty insurance pricing during the RLI Corp. conference call, RLI Chief Operating Officer Jen Klobnak reported that the company is seeing some competitive pressure on the largest accounts in these lines.

“Other companies or MGAs are looking for premium. And so any account that’s north of $1 million in premium is really targeted, and we have lost a few of those,” she said, reporting a mix shift toward more smaller accounts for the specialty carrier.

“Our underwriters are focused on rate and risk selection. And both of those are making an impact to make sure that we’re staying ahead of trends in the industry,” she said.

Related article: Some Large Accounts Start Seeing Chubb’s Back as it Focuses on Middle, Small