The nonstandard auto insurance market in the United States is showing strong signs of growth in 2025. According to a recent report from AM Best, insurers in this sector earned an underwriting profit of $65.2 million in the first half of the year. That’s a big jump compared to the $16.6 million profit recorded during the same period last year.
AM Best pointed to two main reasons for this improved outcome: better pricing of premiums and the use of technology in underwriting, claims handling, and distribution. These changes helped insurers keep costs in check and increase their profitability.
The combined ratio—a key measure of insurance profitability—fell to 96.6 in the first six months of 2025 from 98 a year earlier. A lower combined ratio means the insurers paid out less in claims and expenses compared to what they earned in premiums.
David Blades, AM Best’s associate director of Industry Research and Analytics, explained that the improved numbers show insurers have raised premiums enough to better cover claim costs. Still, he noted that some price increases might be needed in the near future to handle growing expenses, such as replacing car parts and technology, as well as legal costs related to claims.
Premium hikes were much higher in 2024, with increases over 20% in the first half of that year. In comparison, the first two quarters of 2025 saw more modest rises of 10.5% and 3.8%, suggesting that big jumps in prices may have mostly passed.
Overall, the report indicates that nonstandard auto insurers are managing to improve their profits by charging more accurate prices and using technology wisely. This market appears to be on a solid path as it moves through 2025.