As the Wider Market Sinks, the Personal Casualty Insurance Business Is Popping to Start 2025 — Bolstered by Higher Premiums
It’s too bad that investors can’t buy themselves insurance against sagging markets, only they can — by investing in property and casualty insurers, which have surged 7% to start 2025. After three consecutive years of losses on skyrocketing home and auto prices, the industry’s higher premiums are finally starting to catch up with costs.
- Berkshire Hathaway’s ($BRK.A) Warren Buffett said Geico, a division of the sprawling conglomerate, had a “spectacular” 2024 — with its pretax underwriting loss nearly doubling year-over-year to $7.8B.
- Progressive CEO Tricia Griffith struck an equally optimistic tone, crediting pricing for net premium growth, which was higher than the total premium of 2023’s eighth-largest auto insurer.
What’s the upside? Across the industry, premium hikes are seen offsetting years-long underwriting losses, with motor vehicle insurance up 12% year-over-year and single-family home insurance up 14% (WSJ). The combined ratios — considering the cost of all claims and expenses — for auto insurers showed the wider industry making a modest underwriting profit last year, while homeowners policies generated a small loss. How 2025 will crank out, however, will be a matter of great unknowns — factors like wildfires, hurricanes, hail damage, auto accidents, and the like. But investors are coming along for the ride, with the iShares US Insurance ETF up 5.3% YTD.
