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Best’s Market Segment Report: US Personal Auto Insurance Results Worsen as Claims Severity Rises

Following the worst year in the recent past for U.S. personal auto insurers, results continued to slide in the first half of 2023 as the segment posted a direct incurred loss ratio that was more than three percentage points above the one recorded in the same period of 2022, according to an AM Best report.

The Best’s Market Segment Report, “US Personal Auto Results Worsen as Claims Severity Rises,” states that the 112.2 net combined ratio in 2022 for the personal auto line of business represented a deterioration of nearly 11 percentage points from 2021. The 2022 combined ratio also is approximately 10 percentage points worse than the 10-year average and median combined ratios for the line. Overall, the segment saw a $33.1 billion underwriting loss in 2022. Economic inflation, supply chain disruptions and technological advances in vehicles have led to increased claims costs. Coupled with increased accident frequency, loss costs have increased faster than rates, creating rate adequacy challenges for insurers.

“Workplace patterns have changed post-pandemic with work-from-home arrangements, reducing the number of vehicles on the road. However, driver inattentiveness and riskier driving habits have become more problematic in the last few years, and as a result, auto severity has worsened,” said Christopher Graham, senior industry analyst, Industry Research and Analytics, AM Best.

Personal auto loss severity led to significant 13-percentage-point jump in the net loss and loss adjustment expense (LAE) ratio for the private passenger auto line in 2022. The average cost per private passenger auto claim increased 16% in 2022 and eclipsed the $10,000 per claim threshold. The deteriorating direct loss ratio through the first half of 2023 occurred despite a 12.9% year-over-year increase in direct premiums written as carriers took steps to address prevailing loss frequency and severity trends. With the higher premium levels, carriers can see some benefit from a lower underwriting expense ratio.

“AM Best-rated carriers have said that they are reassessing their personal auto portfolios and implementing steps to address selection and price adequacy concern, but the time-consuming regulatory process for rate increases, which varies by jurisdiction, has made it difficult for insurers to stay ahead of deteriorating severity trends and address rate needs in real time,” said David Blades, associate director, Industry Research and Analytics, AM Best.

The report notes that prior to the more recent challenges, the auto insurers that had made significant technology investments to improve underwriting and pricing generally outperformed the rest of the segment. Personal auto insurers also have made improvements in claims handling and expense management through technology-driven data analytics. AM Best expects the accelerated pace of technology adoption to continue.

To access the full copy of this market segment report, please visit

A video discussion on this report with Blades and Graham is available at

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


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