Direct premiums written by US private auto insurers reached new heights in the first quarter of 2024 as rate increases to combat claims costs started to earn in.
Insurers recorded direct premiums written (DPW) of $88.35 billion in the quarter, the highest total since the first quarter of 2001, according to an S&P Global Market Intelligence analysis of the 10 largest private auto insurers in terms of DPW. It was a $12.02 billion increase from $76.33 billion a year ago.
The quarter also marked a significant improvement in loss ratios for the sector. The industry ratio improved to 66.7% from a 24-year-high of 76.1% in 2023 and beat the ratio of 72.4% seen in 2022.
State Farm Mutual Automobile Insurance Co. remained the market leader, logging premium growth of over 20% for the fifth consecutive quarter. The Bloomington, Ill.-based carrier had a 22.5% year-over-year increase in DPW in the quarter to $16.69 billion for a 19% market share.
The Progressive Corp., which CEO Tricia Griffith said added over 900,000 personal auto policies in the quarter, had a 20% premium increase to $14.06 billion for a 16% market share, ahead of third-place Berkshire Hathaway Inc.'s GEICO Corp., which had a 12% market share on DPW of $10.6 billion, a year-over-year improvement of 7.7%.
The Allstate Corp. was fourth with a 10% market share on $9.04 billion in DPW, a 14.1% increase from a year ago. United Services Automobile Association rounded out the top five with a 6% market share on DPW of $5.65 billion, a 17.8% year-over-year increase.
Griffith said during Progressive's first-quarter earnings call that it still feels like a "hard market" in personal auto and that the company "got ahead of the curve as far as pricing."
"We're seeing that with our growth, and I hope to continue to see that," Griffith said.
Premium power
Progressive was one of three companies in the analysis with year-over-year DPW growth of 20% or more. Auto Club Exchange Group had the highest, a 25.1% increase to $1.44 billion, followed by State Farm's 22.5% and Progressive's 20%.
Nine of the 10 insurers saw increases in DPW, seven of them by double digits, including American Family with 18.3%, USAA with 17.8%, Allstate with 14.1% and The Travelers Cos. Inc. with 12.2%.
State Farm had four significant rate increases that took effect in the quarter, including a 24.9% boost in New York that led to a calculated premium change of $679.8 million. Meanwhile, Progressive subsidiary Drive Insurance Co. secured a 19.9% hike in California.
The lone company that had a decrease in DPW was Liberty Mutual Holding Co. Inc., down 6.6% to $3.13 billion. Despite the drop in DPW, Liberty Mutual had three of the top 10 approved rate changes in the quarter, led by a 40% increase in Connecticut.
It also was approved for a 30% hike in Rhode Island, while in Illinois, its subsidiary Safeco Insurance Co. of Illinois secured a 26.1% increase.
Ratios recovering
State Farm also had the highest loss ratio in the analysis at 77.7%, but it was a marked improvement from its 87.9% ratio a year ago. Auto Club Exchange Group was second with a 77.1% ratio, up 1.53 percentage points from the first quarter of 2023, while Allstate saw its ratio improve by 6.77 percentage points to 67.3%.
Loss ratios improved for nine of the 10 companies in the analysis. USAA led the analysis with a 16.53 percentage-point improvement to 66.8% from 83.3%, and American Family Insurance Group saw its ratio fall 13.14 points to 64.5% from 77.6%.
Farmers Insurance Group of Cos. had the lowest loss ratio in the analysis at 55.2%, followed by Progressive at 58.7%.