AM Best: Personal Auto, Homeowners Markets’ Stabilization Despite Decline in Approved Rate Changes

Why It Matters

Moderating premiums signal restored underwriting profitability and may ease affordability pressures for consumers, while state‑specific regulatory dynamics will dictate the speed of rate relief.

Key Takeaways

• Auto rates fell to 3.7% in 2025, down 6 points.
• Homeowners rates dropped to 8.3% in 2025, from 13.5% in 2024.
• Insurers achieved underwriting profits in both lines after years of losses.
• State‑specific filing trends show 10‑point rate reductions in several states.
• Regulatory environments cause timing gaps in approved rate changes.

Summary

The AM Best report highlights a stabilization in U.S. personal auto and homeowners insurance markets, with average annual rate increases returning to pre‑pandemic levels in 2025. After several years of steep hikes driven by elevated loss costs, insurers are now moderating premiums.

Key data points show the average approved auto rate increase fell to 3.7% in 2025, a six‑point drop from the prior year, while homeowners rates slipped to 8.3% from 13.5% in 2024. Both lines posted underwriting gains for the first time in years, reflecting improved loss ratios, advanced underwriting technology, and refined risk modeling.

David Blades noted homeowners generated a net underwriting profit in 2025, ending a multi‑year loss streak. Dylan Cantana highlighted state‑level variations, with Maine, Alabama, Idaho and Iowa seeing more than 10‑point reductions, whereas Nevada and New Jersey experienced increases. He also stressed that regulatory hurdles can delay rate approvals, creating timing gaps across jurisdictions.

The trend suggests insurers may continue moderating rates into 2026, offering relief to consumers where filings are approved, but state regulatory differences will shape the pace of change. Market stability could restore capacity, improve affordability, and reduce the volatility that has plagued personal lines over the past decade.

Original Description

AM Best Director David Blades and Associate Analyst Dylan Catania discuss a new Best's Special Report that finds 2025 marked a significant shift back to pre-pandemic levels after years of large rate increases to keep up with elevated losses.

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