California has emerged as the leader in the U.S. property and casualty insurance market, raking in an impressive $94 billion in direct premiums for 2024. Following closely behind are Florida and Texas, with $71 billion and $59 billion, respectively. This data comes from recent reports by Insurance Business+.
The entire property and casualty insurance sector earned a total of $780 billion in premiums last year, marking a rise from $742 billion in 2023. This upward trend has been consistent since 2014, with a notable dip in 2022 that was quickly corrected in 2023.
In 2022, the industry faced significant challenges due to high claim costs, largely driven by inflation. For instance, inflation in used car prices added around $15 billion in claims, particularly impacting personal auto insurance. This surge in costs put pressure on profit margins and slowed premium growth.
In 2024, direct losses accounted for 63% of the premiums earned, totaling $492 billion. Insurers are now facing new pressures, especially in California, where the market is under strain from various factors, including regulatory changes and rising reinsurance costs.
January 2025 brought catastrophic wildfires to Southern California, marking the most expensive wildfire event in U.S. history. Over 16,000 structures were destroyed, adding to the insurance industry’s challenges. A report from Morningstar DBRS pointed out that the ongoing high reinsurance costs, which have been elevated since 2023, are complicating the situation for insurers in California.
As reinsurance costs rise, primary insurers are retaining more risk, which increases their exposure to natural disasters. Some companies have even stopped issuing new policies in high-risk areas. In response to these challenges, California implemented new regulations in December 2024, allowing insurers to pass reinsurance costs onto policyholders for the first time. While this reform is seen as a step forward, it has raised concerns about affordability and could lead to backlash from consumer advocacy groups.
Among the insurance companies, State Farm leads the market with a share of 12.81%, more than double that of its closest competitor, Progressive, which holds 6.18%. Most of State Farm’s premiums come from California, totaling $9.9 billion. In contrast, Progressive earns a significant portion of its premiums from Florida, where it focuses on auto insurance and high-risk drivers.
The landscape of the property and casualty insurance market is shifting, and these developments highlight the ongoing challenges and adaptations within the industry. For a deeper look into the financial aspects of this sector, the Property and Casualty Financial Insights dashboard offers more detailed information.