State Farm gets personal auto premium bump in Q2, remains largest auto insurer

State Farm Mutual Automobile Insurance Co. remained the largest personal auto insurer in the US during the second quarter amid a record quarter for the sector, according to an S&P Global Market Intelligence analysis.

The insurer's direct premiums written surged nearly 24% — their most rapid pace in any quarter in at least the last 21 years — as it continued to take significant pricing actions, particularly in the personal auto business.

State Farm bucked a trend that in recent years saw its premium growth trail its competitors. The insurer's premiums grew 23.7% year over year, the largest increase among the top 10 personal auto insurers. The increase in premiums was also State Farm's largest year-over-year increase since 2002.

The Progressive Corp. reported the second largest growth during the second quarter with premiums increasing 22.8%.

During a second-quarter earnings call, Progressive CEO Susan Griffith partly attributed the growth to balancing growth and profitability.

Liberty Mutual Holding Co. Inc. was the sole top 10 insurer to report a year-over-year premium decrease, dropping 5.9% compared to 2022.

In a second-quarter financial document, the insurer attributed the decrease in premiums to "targeted actions in US personal lines and US business lines to reduce new business growth to address unfavorable severity and frequency trends."

Additionally, Liberty Mutual has been aggressively reducing its recently acquired State Auto businesses, reducing subsidiary State Auto P&C Insurance Co. by 33.6% year over year.

As reported in a June Schedule T, LM General is Liberty Mutual's largest private auto company and writes almost only that line of business. The premiums were down mid-single digits in New York and Georgia, its largest two states, flat in Massachusetts, its third-largest state, and down approximately 27% everywhere else.

US personal auto insurers wrote $75.24 billion in premiums during the second quarter of 2023, a record number for the period since 2001. The total was an increase of $8.71 billion from 2022's second-quarter total of $66.53 billion. These premium values exclude New Jersey-based premiums due to the unavailability of quarterly data.

The rise in premiums can be attributed in part to carriers continuing to produce strong top-line growth as they attempt to catch up to fast-rising private auto loss costs via rate increases.

Even as premiums written continue to hit new records, insurers are bumping up against ever-increasing direct incurred loss ratios.

The total loss ratio for personal auto decreased to 78.2%in the second quarter, down 0.2% from the same period of 2023.

Although State Farm saw the largest year-over-year increase in direct premiums written, it also had the worst loss ratio at 83.9%.

Despite having the second-largest year-over-year premium increase among the top 10, Progressive saw the largest deterioration in its loss ratio, which fell 7.32% year over year to 75.6%.

Loss ratios remained elevated from the 2016 to 2019 pre-COVID-19 average of 68.1%.

Among the top 10, only State Farm, United Services Automobile Association, GEICO Corp. and American Family Insurance Group saw an improvement.

Compared to the pre-COVID-19 loss ration average from 2016–2019, USAA had the worst loss ratio average among the top 10, followed by GEICO and then American Family Insurance.