In separate reports last week, AM Best and Morgan Stanley analyzed P/C insurance industry expense ratios, with one reporting a 2.4-point drop over the past decade and the other projecting another potential 2.0-point decline by 2030.
While both reports highlight the impact of AI and automation in driving down expenses, the AM Best report, which gives the historical take, also flags drops in rent expenses related to increased remote work as a factor.
Analyzing underwriting ratios of the 2014-2024 timeframe, AM Best noted that while the loss ratio declines, including a 5.4-point drop in the U.S. property/casualty
insurance industry loss from 2023 to 2024, drove improved results in recent years, looking over the entire 11-year period, the expense ratio fell to 25.3 in 2024, compared to 27.7 in 2014.
The overall 2.4 percentage point decrease in the U.S. P/C insurance segment’s long-term underwriting expense ratio was primarily driven by a 1.9-point decrease in
the other acquisition expenses ratio and a smaller, 0.5-point decrease in the general expense ratio, AM Best said in a Jan. 6, 2026, special report, “Lower P/C Insurer Expenses Boost Underwriting Results.”
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(Editor’s Note: Neither the commission expense component nor the tax expense component of the expense ratio changed much over the study period. The AM Best report does not include 2025 results.)
The overall improvement is “reflective of the progress the P/C industry has made via increased digitalization, and the use of automation and advanced technologies,” the AM Best report states.
Addressing the biggest part of the drop—the 1.9-point decrease in other acquisition expenses—the report notes that the “shift from a five-day-a-week office commitment to hybrid or fully remote work policies has lowered the proportion of other acquisition expenses attributable to rent expense.”