Insurance Agencies & Brokerages NAICS 524210

May 28, 2025 - Commercial Insurance Lines Hit Profitability Last Year

• Commercial lines of insurance in the US had stable underwriting results for 2024, according to Fitch Ratings, notching the industry’s fourth straight year of underwriting profitability with a 97% combined ratio (a measurement of an insurance firm’s profitability). Workers’ compensation insurance was the top performing segment for the year with an 89% combined ratio and balanced out lower performers such as auto insurance. Personal lines insurance, which makes up 54% of the US property and casualty industry’s underwritten policies, returned to profitability for the first time in three years with a 97% combined ratio, down from 107% in 2023. The results reflect reduced claim severity and rate increases. Homeowners’ insurance scored a slight profitability gain from rate increases, but Fitch expects a troublesome 2025 for the line as the industry still reels from the 2025 California wildfires and 2024 hurricane season.
• As AI begins to take a more prominent role in insurance agency operations it is receiving more scrutiny from regulators to ensure against “AI-washing,” in which companies tout new AI benefits that are in fact just automation instead of machine learning. Operational areas of insurance agencies that walk this fine line include customer service chatbots (preprogrammed trees of responses), claims processing (if/then scenarios combined with manual manipulation), and fraud detection (statistical models). Misleading about AI can lead to fines and legal trouble, and customer retention can suffer if policyholders are promised better service with adaptive AI but don’t see much difference when what they’re really getting is automation. The National Association of Insurance Commissions (NAIC) has called for more transparency and rules for compliance with AI and have adopted guidelines for insurers to use to achieve industry-wide consistency.

• Revenue for the insurance agency and brokerage industry surged 14.4% year over year in the fourth quarter of 2024, according to the US Bureau of Labor Statistics. It is a familiar tune in the industry with quarterly revenue increasing each year since the lows of the pandemic in mid-2020. Profits, however, have been harder to come by. Increased claim losses from natural disasters brought on by climate change - and the propensity of consumers to keep building in disaster-prone areas - have hammered insurance companies across the industry. According to reinsurer Swiss Re, losses related to storms in the US have increased 8% each year for more than a decade. Policyholders who live in areas with increased threats of hurricanes, thunderstorms, or wildfires face continued rising premiums, possible policy cancellations, and stricter policy conditions.
• US homeowners have had their insurance premiums go up by 24% over the past three years, according to a report from the Consumer Federation of America (CFA). Between 2021 and 2024, typical homeowners insurance premiums have risen by an average of $649 per customer. On a national level, that translates to a $21 billion price increase for homeowners insurance during the same time period, more than double the rate of inflation. The CFA found that premiums went up for 95% of US zip codes with the biggest increases coming from Utah (up 59%), Illinois (+50%), Arizona (+48), and Pennsylvania (+44). The most expensive states to insure a home were Florida, Louisiana, Oklahoma, Kentucky, and Nebraska. The steep price increases and the inability by some customers to find proper insurance in areas prone to natural disasters are creating an unsustainable affordability crisis in home insurance, according to the CFA report.