US private auto insurers' premiums rise to record levels after strong Q2 2024

Private auto insurers in the US continued to benefit from earned-in rate increases, pushing premiums to record levels in the second quarter of 2024.

Insurers recorded direct premiums written (DPW) of $86.87 billion during the quarter, the highest second-quarter total since 2001, according to an S&P Global Market Intelligence analysis. This marks an $11.34 billion increase from $75.53 billion a year ago.

The private auto sector recorded $167.6 billion in direct premiums earned in the first and second quarters, Market Intelligence data shows. The sector accounted for 34.6% of the industry's direct premiums earned in the first half of 2024, according to research from Market Intelligence.

Loss ratios for the sector also showed dramatic year-over-year improvement. The industry ratio fell 9.81 percentage points to 68.33% from 78.14% in 2023 and also beat the ratio of 78.38% seen in 2022.

State Farm Mutual Automobile Insurance Co. remained the market leader as it booked premium growth of over 20% for the sixth consecutive quarter. The Bloomington, Ill.-based carrier had a 20.1% year-over-year increase in DPW in the quarter to $16.64 billion, representing a 19.2% market share, a 0.9-percentage-point increase from 18.3% a year ago.

The Progressive Corp., which had another quarter of solid growth in policies in force (PIF), maintained the second spot in the analysis with a 16.1% market share as it posted the biggest increase in DPW by percentage in the top 10. The Mayfield, Ohio-based insurer recorded $13.99 billion in premiums in the quarter, a year-over-year increase of more than 26% from $11.1 billion a year ago.

Berkshire Hathaway Inc.'s GEICO Corp. and The Allstate Corp. posted slight decreases in their market shares, though they maintained the third and fourth positions, respectively. GEICO's market share dipped 0.4 points year over year to 11.7% from 12.1% on DPW of $10.2 billion, while Allstate's market share of 10.1% on DPW of $8.8 billion was a 0.2-point dip from 10.3% the previous year.

United Services Automobile Association (USAA) rounded out the top five with a 6.1% market share on DPW of $5.28 billion, a 14.1% year-over-year increase.

Progressive, which added over 900,000 personal auto policies in the first quarter, maintained that momentum with a sequential increase in policies in force to 21.5 million from 20.5 million in the first quarter and a year-over-year increase from 19.66 million.

Progressive CEO Tricia Griffith said during the company's second-quarter earnings call that the increase was fueled by having "the right rates on the street," as well as a pullback on nonrate items and increased media spending.

"I think it's just a bunch of things that came together with a lot of hard work with a lot of teams to make sure that we ... were able to capitalize and maximize our PIF growth," Griffith said.

Premiums up double-digits

Eight of the top 10 insurers in the analysis, including Progressive and State Farm, booked double-digit increases in DPW. In addition to GEICO, Allstate and USAA, Auto Club Exchange Group had the third-largest increase with 18.7%, while American Family Insurance Group and The Travelers Cos. Inc. had increases of 12.5% and 10.8%, respectively.

State Farm and its subsidiaries had seven of the top 10 personal auto rate increases that took effect in the quarter. Among the increases was a 23.1% boost in New Jersey, which produced a calculated premium change of $196.1 million.

Liberty Mutual Holding Co. Inc. saw its DPW drop 10.2% in the quarter to $2.96 billion, the lone company in the top 10 to see a decrease. However, Liberty was able to get a 25% rate hike in California that produced a calculated premium change of $179.9 million.

Ratios continue to improve

Improvement in frequency and severity trends have led to an easing of loss ratios for companies in the analysis. All of the insurers in the top 10 of the analysis reported year-over-year decreases in their ratios, four of them by 10 or more percentage points.

Progressive had the steepest drop — 14.18 points — improving to 61.5%, the second-lowest ratio among the top 10. Farmers Insurance Group of Cos. had the lowest ratio at 60.3%, a 10.84-point improvement from the prior year. Travelers had a 10.06-point drop, down to 63.2% from 73.2%, while USAA's ratio fell 12.58 points to 66.8% from 79.3%.

State Farm and Auto Club Exchange had the highest ratios at 79% and 74.5%, respectively.