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Profitability by line and state: what NAIC data says about margins
What the NAIC's profitability report shows about auto insurer margins, how auto compares with homeowners, and why one year of data misleads.
Yes, auto insurers made money in 2024, and the NAIC's own report shows how much: across the country, private passenger auto earned an estimated 13.7% return on net worth that year, the best result in the ten years the report covers. The same report shows a ten-year average of 5.0%, with a loss in 2022, and wide gaps from state to state. So the honest answer to "are insurers making money?" is "it depends heavily on which year, which coverage and which state you look at," and the NAIC's Report on Profitability by Line by State is the best public place to see all three.
This article explains what that report measures, how to read its columns, what it says about auto compared with homeowners and commercial lines, and what it cannot tell you about the company that just raised your rate.
What the report is and who publishes it
The National Association of Insurance Commissioners (NAIC) is the body of state insurance regulators. Its Profitability Report estimates profit for property and casualty insurance by line of business and by state. According to the 2024 edition, dated July 2026, it is built from annual financial statements filed with the NAIC by 2,634 insurers, which the NAIC estimates represent well over 95% of U.S. premiums written. Earlier editions followed the same pattern: the NAIC announced the 2023 edition in April 2025, so each report describes a year that ended well over a year before you read it.
The report does not come from the insurers' own profit announcements. Insurers file by company, not by state and line, so the NAIC takes the data that is reported by state and line (the premium and loss exhibit) and spreads the rest, such as net worth, investment income and most general expenses, across states and lines using allocation rules. That is why the NAIC calls the results "approximations." We will come back to why that matters.
The columns that matter: underwriting, investments and return on net worth
An insurer earns money in two ways. It can collect more in premiums than it pays out in claims and expenses, which is an underwriting profit. And it can invest the money it holds between collecting premiums and paying claims, plus its own capital, which is investment gain. The report shows both and then combines them.
Here is how the NAIC's 2024 countrywide direct figures break down for private passenger auto liability, per $100 of premium earned. The figures are the NAIC's; the arithmetic is simply addition.
| Item | Per $100 of earned premium |
|---|---|
| Losses incurred | $71.00 |
| Loss adjustment expense | $10.30 |
| General expense | $4.70 |
| Selling expense (commissions and acquisition) | $13.60 |
| Taxes, licenses and fees | $2.30 |
| Dividends to policyholders | $0.40 |
| Underwriting result | -$2.20 |
| Investment gain on insurance transactions | +$8.90 |
| Federal income tax | -$1.30 |
| Profit on insurance transactions | +$5.40 |
Liability coverage lost $2.20 on every $100 in underwriting, then made $8.90 by investing the reserves and unearned premium it held, and after estimated federal taxes kept $5.40. In other words, a line can lose money on its policies and still earn a profit, which is the reason profit "on the policies" and profit "on the business" are different questions.
The last column, return on net worth, divides that after-tax profit (plus the investment return on the capital allocated to the line) by the capital and surplus allocated to the line, adjusted toward generally accepted accounting principles (GAAP). It answers a question an investor asks: how much did the capital committed to this business earn? For private passenger auto liability in 2024 the answer was 10.0%.
How this relates to the combined ratio
The combined ratio is the same underwriting arithmetic in a different form. Add the loss ratio, loss adjustment expense and the expense items, and a total under 100 means an underwriting profit. The liability items above total 102.3, which is the mirror image of the -$2.20 result. For all private passenger auto in 2024 the NAIC's direct figures total about 96, a 4.3-point underwriting profit after rounding.
Do not expect the NAIC's number to match a company's published combined ratio. The NAIC adjusts some expenses toward a GAAP basis, and uses direct (before reinsurance) premium, while a company's combined ratio is usually on a statutory net basis. For a longer treatment of that company-level measure, see how to read an insurer's combined ratio and surplus.
What 2024 said about auto, homeowners and commercial lines
The 2024 countrywide direct table makes comparisons across lines easy. Here are the lines most readers ask about, with the ten-year (2015-2024) simple averages from the report's summary pages.
| Line | 2024 underwriting result | 2024 return on net worth | 10-year average return |
|---|---|---|---|
| Private passenger auto liability | -2.2% | 10.0% | 4.4% |
| Private passenger auto physical damage | +12.6% | 21.6% | 6.6% |
| Private passenger auto, total | +4.3% | 13.7% | 5.0% |
| Homeowners | +5.7% | 13.9% | 5.2% |
| Commercial auto, total | -8.6% | 6.5% | 2.8% |
| All lines | +4.3% | 13.9% | 7.3% |
Three things stand out.
Physical damage and liability behave differently. Physical damage (collision and comprehensive on your own car) is "short tail": claims are reported and paid quickly, so the numbers react fast to repair costs and used-car prices. In the report's ten-year summary it swung from a 9.0% loss on net worth in 2022 to a 21.6% return in 2024. Liability, which pays injuries and damage to other people, settles more slowly, moves less in a single year, and in 2024 still showed an underwriting loss even as physical damage had its best year of the decade. For why the two parts of your policy are priced so differently, see collision coverage and liability coverage.
Auto was not the profit leader in every year. In 2022 private passenger auto as a whole had an underwriting loss of 12.1% of premium and a negative return on net worth of 3.3%. In 2023 the return recovered to 3.3%. Then 2024 jumped to 13.7%. A reader who saw only 2022 would conclude that insurers were losing their shirts, and one who saw only 2024 would conclude they were rolling in money. The ten-year average of 5.0% is a steadier guide.
Commercial auto is the weaker line. Commercial auto liability shows underwriting losses in every one of the ten years in the NAIC's summary table and a ten-year average underwriting result of about -11% of premium, offset by investment gain. If you hear that "auto insurance loses money," the speaker may be thinking of commercial auto or of liability alone.
Homeowners tells a different story: heavily affected by storms and fire, its underwriting results ranged from a 13.7% profit in 2015 to a 12.2% loss in 2017, and its ten-year average underwriting result was slightly negative. For how weather feeds into the car side, see hail, floods and hurricanes: how weather shows up in car premiums.
Why a single year can mislead: use the long averages
The NAIC says in the report that calendar-year results fluctuate and that care should be taken before drawing conclusions from one year; it supplies ten-year simple averages for exactly that reason. The average return on net worth, the average profit and the average losses incurred are plain averages of the ten annual results, with no weighting by premium.
The swing is easy to see in the countrywide private passenger auto total from the report's summary pages:
| Year | Underwriting result | Return on net worth |
|---|---|---|
| 2020 | +7.6% | 10.5% |
| 2021 | -1.5% | 4.2% |
| 2022 | -12.1% | -3.3% |
| 2023 | -5.6% | 3.3% |
| 2024 | +4.3% | 13.7% |
| 10-year average (2015-2024) | -2.0% | 5.0% |
Auto insurance prices follow these results with a lag. A year like 2022 is typically followed by rate filings meant to repair the damage, and a year like 2024 by more modest ones. The pattern is a feature of what the industry calls the underwriting cycle, covered in hard and soft markets: why car insurance prices move in cycles. Judging the industry by 2024 alone would mean ignoring the three money-losing years that preceded it.
The NAIC also compares the property and casualty industry's return on net worth with other industries. In its 2024 report the industry's 2024 return was 13.2% (2023: 7.3%), against a 2015-2024 average of 6.7% for property and casualty insurance versus 14.9% for a Fortune-based all-industry comparison. Treat that chart as a rough comparison: the NAIC itself describes the all-industry figure as an approximation based on a simple average of Fortune's industrial and service sectors.
Reading the state tables: same line, very different results
The report's largest sections are state-by-state tables. For each state it shows, for every line, losses, expenses, underwriting profit, investment gain and return on net worth, for the last ten years and the average. For private passenger auto in the 2024 report, the spread is large:
| State | 2024 return on net worth | 10-year average (2015-2024) |
|---|---|---|
| North Dakota | 24.1% | 10.0% |
| Hawaii | 19.8% | 12.9% |
| Florida | 21.5% | 2.9% |
| Michigan | 13.0% | 6.1% |
| California | 6.5% | 2.5% |
| New York | 4.9% | 1.7% |
| Georgia | 12.0% | 0.7% |
| Nevada | 5.2% | 0.5% |
These are the NAIC's figures for private passenger auto in total, direct basis. Several lessons come out of the rows:
- The averages differ by an order of magnitude. Hawaii averaged 12.9% a year over ten years, while Nevada and Georgia averaged under 1%. A state where insurers earn well and one where they barely break even can both be regulated by the same rules about "fair" rates.
- Single years swing wildly inside one state. Florida posted a return on net worth of -11.6% in 2022 and +21.5% in 2024, with a ten-year average of 2.9%. Anyone quoting Florida's 2024 number as "typical insurer profit" would be wrong; anyone quoting 2022 would be equally wrong.
- Underwriting and total returns can diverge. Michigan's private passenger auto underwriting result averaged about -11.9% over the ten years, yet its average return on net worth was positive at 6.1%. The report's method credits investment gain on loss reserves and surplus, so a state with large reserves relative to its premium shows a larger investment cushion. The table does not say why; the lesson is to read both columns.
- A high-price state is not automatically a high-profit state. New York has among the highest average premiums, yet its ten-year average return of 1.7% is among the lowest in the table. Price level and margin are different things; a state where claims cost a lot can have high prices and thin margins at the same time.
Your own state's page is easy to find because the state tables are organized alphabetically. Check the "Private Passenger Auto Total" row for return on net worth and underwriting profit, then compare the most recent year with the ten-year average.
What the report cannot tell you
The NAIC attaches a page of disclaimers to the report and asks that it travel with any quoted figure. The important ones are these.
- It cannot say whether current rates are adequate. The report states that it cannot and should not be used to determine whether current rates are adequate to cover future costs. It describes the past. Rate reviews look forward: what claims will cost during the months the new rate is in force.
- It cannot say anything about one insurer. All company data is added together before allocation. Regardless of how much business a company writes in a state, it has the same effect in every state on the allocation of data that is not reported by state. A company can be far more or far less profitable than the state average.
- It is an approximation. The NAIC says a "one-size-fits-all" method can only approximate actual profit and that some components in a state and line could differ significantly. Net worth, investment gain, federal taxes and general expenses are allocated, not measured, at the state level.
- Unrealized capital gains are excluded. Investment gain counts income and realized gains, not paper gains on holdings, which the report treats separately in a technical note.
- It lags. The 2024 edition appeared in July 2026. Costs for 2025 and 2026 repairs and medical care, and any change in a state's law, show up in later editions.
- It allocates capital by a formula. Return on net worth depends on how much capital is assigned to the line. Lines with slow-to-settle claims get more capital per dollar of premium, which lowers their return on net worth even if the underwriting result is the same.
The NAIC also splits the results for stock insurers (owned by shareholders) and mutual and reciprocal insurers (owned by policyholders) beginning with the 2022 data year. That matters when you compare a mutual insurance company with a stock company: their capital and dividend practices differ, and the report lets you see both groups separately.
How to use the report when a rate increase is proposed
When an insurer files for a rate increase or your renewal notice shows a jump, the NAIC report is background, not evidence for or against a specific request. Used well, it helps you ask better questions.
- Find your state's private passenger auto row. Note the most recent year and the ten-year average for underwriting result and return on net worth.
- Separate liability from physical damage. If your state's physical damage line is strongly profitable and liability is not, a request concentrated in collision coverage deserves more scrutiny than one concentrated in liability.
- Compare the latest year with the average. If the latest year is far above the ten-year average, the NAIC data alone does not prove that rates are excessive; it shows one strong year after weaker ones. If it is far below, the filer may have a case for catch-up.
- Read the filing for the forward-looking part. The company's own case rests on projected losses, trend factors and expenses. loss ratios and rate filings: how insurers justify an increase and How to read a car insurance rate filing on SERFF explain what to look for.
- Check whether your state reviews the request. In a prior approval state the regulator must approve a filing before it takes effect; elsewhere it may be reviewed after the fact. how car insurance rate approval works has the basics, and the state's insurance department can tell you the exact process.
- Ask what changed in your state. Law changes, such as a new threshold for suing or a change in required coverages, shift costs for years. Profitability is one lens, not the whole picture.
- Look at your own premium history. The renewal rate increase checker helps you see whether your increase is larger or smaller than a typical one before you compare insurers.
If a rate hearing or public comment process is open, that is where consumer advocates and regulators test a request line by line; see rate hearings and intervenors: how the public challenges an increase.
Common questions
Is the NAIC report the same as an insurer's profit?
No. It estimates profit for an industry line in a state, using allocations. It is not a financial statement for any company. Two insurers in the same state can post very different results, and the NAIC data cannot tell you which is which.
Why do insurers say they lose money on auto when the report shows a profit?
They may be speaking about a different year, a different line or a different measure. Liability showed an underwriting loss in 2024 even though total auto showed an underwriting profit and a 13.7% return on net worth. The underwriting result and the return on net worth answer different questions, and the ten-year averages (an underwriting loss of 2.0% and a return of 5.0% for private passenger auto) tell a more modest story than 2024 alone.
Does a high return in my state mean rates should fall?
Not by itself. One year's strong return after years of losses may only restore what was lost, and the report is not designed to say what rates will be adequate in the future. It is a reason to ask questions of a rate filing, not proof that the rate is excessive.
Where do I find the report?
It is published as a PDF by the NAIC, titled Report on Profitability by Line by State, with one edition per data year. Open the latest edition and use the table of contents to find the "Countrywide by Line - Direct" tables and the state sections. For other NAIC auto data, such as average premiums and market share, see What NAIC auto insurance data measures and NAIC market share reports: who writes auto insurance in your state.
Key takeaways
- The NAIC's 2024 report put private passenger auto's return on net worth at 13.7% for 2024, against a ten-year average of 5.0% and a negative 3.3% in 2022. Judge margins by the average, not the latest year.
- Auto liability and physical damage differ: in 2024 physical damage had a 12.6% underwriting profit and liability a 2.2% underwriting loss, with investment income lifting liability's return to 10.0%.
- State results vary widely. Over ten years, Hawaii averaged 12.9% and Georgia and Nevada under 1%, and a single state can swing by more than 30 points between a bad year and a good one.
- The report cannot say whether current rates are adequate and cannot describe any one insurer, so use it as context for questions about a rate request rather than as proof.