Best’s Special Report: Personal Auto and Homeowners Markets’ Stabilization Evident Despite a Decline in Approved Rate Changes
Average annual rate increases for U.S. private passenger auto and homeowners’ policies shifted back to pre-pandemic levels in 2025, following years of large increases amid elevated losses in each line of business, according to a new AM Best report.
The average approved rate increase for homeowners’ policies dropped off 5.2 percentage points to 8.3% in 2025, compared with a year earlier. For private passenger auto (PPA), the average approved rate increase was 3.7% in 2025, significantly less than the 9.7% level registered in 2024.
“The improvement experienced by U.S. homeowners’ insurers has been driven by both aggressive rate increases and enhanced pricing sophistication in states that had been generating the most adverse results,” said David Blades, associate director, AM Best. “PPA and homeowners underwriting results have made progress, partly because of a concerted push for premium adequacy.”
The report’s underlying analysis is based on a review of Best’s State Rate Filings data, which shows that increased loss frequency and severity across the United States led to spikes in filed rate increases in the personal lines industry in 2023 and 2024. In 2025, there was a significant shift in the magnitude of rate increases following a trend of improving loss ratios for insurers in the prior year, which may signal stabilization after a period of higher rate changes. The improved industry performance was evident from a 9.2 percentage point decrease in the total U.S. homeowners’ industry loss ratio from 74.8 in 2023 to 65.6 in 2025.
