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Last updated: June 2, 2023

Auto Insurers Had Historically Bad Results in 2022

The year 2022 saw the poorest auto insurance underwriting writing results in almost three decades.

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Providers in the insurance industry, small and large, reported historically bad numbers as inflation, higher rates of claims, and adverse reserve development shocked the industry. The good news is that the path to recovery isn’t far from sight, but it might mean short-term premium increases for American drivers. Below, we’ll cover the key takeaways from a recent S&P Global report and what it means for drivers in the near future.

Worst Car Insurance Underwriting Results in 27 Years

Auto insurance companies just reported their worst numbers in 27 years, and their losses were significant.

The industry’s net combined growth ratio, which is the sum of the loss ratio, loss adjustment expense (LAE) ratio, and expense ratio, reached 112 percent in 2022.1 Insurance providers use a combined net ratio to measure their losses and expenses relative to how much they earn through premiums. A low combined net ratio indicates efficient claims management, effective net underwriting, and profitability. Typically, auto insurance providers aim for a combined net ratio below 100 points to maintain profitability and keep premiums low for drivers.

Last year’s combined net ratio of 112 percent was the highest since 1996, which is as far back as S&P Global Market Intelligence has been tracking combined ratios. The second-highest year on record was in 2000 when the industry reached 110 percent. Here’s what the net combined ratios have looked like since 2000.

Year Net combined ratio
2000 110%
2001 107%
2002 104%
2003 98%
2004 94%
2005 95%
2006 94%
2007 98%
2008 100%
2009 101%
2010 100%
2011 101%
2012 101%
2013 101%
2014 101%
2015 104%
2016 106%
2017 102%
2018 97%
2019 98%
2020 91%
2021 101%
2022 112%

State Farm Led The Pack in Historically Poor Year

Although most car insurance providers had a poor underwriting year in 2022, State Farm led the pack with the highest combined net ratio (128 percent). That means State Farm incurred the most losses out of any other provider ($6.7 billion net loss and $13.2 billion underwriting loss).


State Farm wrote $46.6 billion in direct premiums in 2022, making it the largest U.S. private auto insurance underwriter.

Here’s how the largest 20 providers performed in 2022:

Company Premiums written (in billions of dollars) Combined net ratio
State Farm $46.66 128%
Progressive $38.93 96%
GEICO $38.12 107%
Allstate $29.61 113%
USAA $16.41 116%
Liberty Mutual $13.7 111%
Farmers Insurance $12.61 108%
Travelers $5.84 108%
American Family $5.83 113%
Nationwide $5.51 115%
Auto Club Exchange $4.01 113%
Kemper $3.61 117%
Erie Insurance $3.59 126%
Auto-Owners Insurance $3.42 111%
CSAA Insurance Exchange $3.08 107%
Mercury Insurance $2.57 111%
The Hartford $1.98 104%
Auto Club Insurance Association $1.8 109%
Sentry $1.36 98%
The Hanover Insurance Group $1.35 102%


In 2022, Progressive overtook GEICO as the second-largest auto insurance underwriter in the country, and Travelers supplanted Nationwide to become the eighth-largest underwriter.

How Auto Insurers Miscalculated Their Expenses

When auto insurance providers calculate their expenses for the year, they set aside funds, or reserves, to cover the expected claims for the year. When the annual dollar amount for claims is less than their annual reserve amounts, companies report a favorable reserve development. If their claims exceed their reserve funds (meaning they spent more on claims than they set aside in reserves), they report unfavorable reserve development.

There were several factors, both internal and external, that led to the poor underwriting year in 2022. Here are some of the biggest reasons insurers reported such low underwriting performance:

  • Inflation: Inflation can hurt underwriting performance in many ways. For one, inflation increases the cost of car parts and labor for repairs, leading to a rise in claims payouts. Additionally, the sufficiency of reserves will depreciate naturally as inflation increases. If car insurance providers don’t adjust their reserves to reflect inflation, it could lead to adverse reserve development.
  • Hurricane Ian and increase in claims: Experts attribute some of the increase in claims in 2022 to Hurricane Ian. Hurricane Ian resulted in an estimated $112.9 billion in insured total losses, with as many as 35,000 vehicles damaged in the process.2
  • Adverse reserve development: Poor underwriting efforts led to adverse reserve development in 2022. For the first time in 10 years, the cost of claims exceeded reserve funds. Insurance providers had to strengthen their reserves by $2.43 billion in 2022 (approximately a $7 billion swing from the previous year), which was the first time the insurers reported adverse reserve development since the mid-1990s.

What This Means for the Average Driver

Auto insurance providers have to make up for the losses in claims and inflation somehow, and part of that “somehow” will come in the form of premium increases.

Most states require insurance providers to ask for permission in order to raise premiums, and many courts are granting them that permission. In California, for example, GEICO, Mercury, and Allstate received approval to charge 7 percent more as early as February 2023.3 Although courts are less willing to grant premium increases that exceed a certain percentage (it’s about 7 percent in California), you can expect similar increases across the country.

According to the Market Intelligence report, insurance providers should be close to breaking even by 2024. By 2025 or 2026, they should reach profitability and see a sub-100 percent combined net ratio. Until then, however, you can expect to see an increase in your premium.


Want to find more ways to keep your insurance rates low? Check out’s guide on lowering the cost of car insurance.


A combination of inflation, Hurricane Ian, increased claims, and adverse reserve development led to the worst recorded underwriting performance in recent history. State Farm, the country’s largest provider, led the pack in poor underwriting performance in 2022. It will probably take two to three years for providers to reach a sub-100 combined net ratio, and the average driver should expect to see their premium rise between now and then.


  1. US private auto insurers report historically bad underwriting results in 2022. S&P Global Market Intelligence. (2023, May 8).

  2. Hurricane Ian – Response and Recovery. FEMA. (2023, Mar 8).

  3. Californians, brace for another bill increase: your car insurance. Los Angeles Times. (2023, Feb 21).