US Home and Auto Insurers Are Requesting Smaller Rate Increases After Catching Up on Pricing

By International Desk: After several years of pushing through big rate hikes, many home and auto insurance companies in the United States now appear to have caught up with the risks they are covering. As a result, they are asking for much more modest increases in premiums.

A recent report from AM Best, a well-known insurance industry rating agency, shows that approved rate increases for homeowners insurance fell noticeably in 2025. The average approved increase dropped to 8.3 percent, down from 13.5 percent the year before. For private passenger auto insurance, the average rate increase slowed even more sharply, to 3.7 percent in 2025 compared with 9.7 percent in 2024.

This shift comes after a tough period for insurers. Homeowners insurance had been losing money on an underwriting basis for five out of six years from 2018 through 2023. In 2025, however, the industry turned things around and posted an underwriting profit of more than $16 billion for the homeowners line, the first such profit in five years. AM Best pointed to the absence of major hurricane landfalls and a more cooperative reinsurance market as key reasons for the improvement.

Better results also showed up in lower loss ratios. In the ten states that account for about 54 percent of the homeowners market, improved catastrophe management, stricter underwriting standards, and more careful selection of risks helped bring down losses relative to premiums.

The story is similar for auto insurance. Companies used more refined underwriting methods and new technology to better control losses and expenses. Overall, auto insurers recorded an underwriting gain of nearly $29 billion in 2025, a strong recovery from a nearly $17 billion loss just two years earlier.

In short, after a period of playing catch-up with rates to offset rising claims and inflation, personal lines insurers seem to have reached a better balance between the premiums they collect and the risks they take on. This has allowed them to ease up on the size of the rate increases they are seeking from regulators and customers.