Updated Jun 17, 2026
Auto insurance rate increases slowing to 3.7% in 2025, down from 9.7% in 2024, marks one of the sharpest single-year decelerations the industry has recorded in recent memory.
That finding comes from a new AM Best report covered by PropertyCasualty360, which analyzed state insurance rate filings and found that approved premium increases for both private passenger auto and homeowners insurance moderated significantly in 2025. According to PropertyCasualty360, the shift reflects improved underwriting performance and a more balanced market environment after years of steep, loss-driven hikes. The Save Max Quote Index, drawn from 3.3 million+ real quote requests, has tracked similar softening signals in consumer shopping behavior heading into mid-2026.
Auto Insurance Rate Hikes Drop From 9.7% to 3.7% in a Single Year
The numbers tell a striking story. Average approved auto insurance rate increases fell to 3.7% in 2025, compared with 9.7% in 2024, according to the AM Best report. That is more than a halving of the pace of premium growth in a single calendar year.
Here is why that matters for your wallet: the large premium increases approved during 2023 and 2024 were largely a response to rising claim frequency and severity. Insurers were essentially playing catch-up after years of absorbing losses that outpaced what they collected in premiums. Once that gap closed, the pressure to keep hiking rates began to ease.
The moderation is real, but it does not mean premiums have fallen. Approved rate increases at 3.7% still mean your renewal is likely higher than last year. The pace of pain, however, has slowed considerably.
Why Insurers Are Finally Pulling Back on Premium Increases
Restored profitability is the core driver. As insurers improved their financial results, the need for substantial rate hikes began to diminish, AM Best found. The years of elevated claims costs, weather-related losses, and inflationary pressures that forced aggressive pricing action have started to recede.
David Blades, associate director at AM Best, pointed to two specific forces behind the improvement in homeowners insurance:
"The improvement experienced by U.S. homeowners' insurers has been driven by both aggressive rate increases and enhanced pricing sophistication in states that had been generating the most adverse results."
The same logic applies to auto. Blades noted that underwriting results for both lines improved in part because of efforts to ensure premiums more accurately reflect risk. In plain terms: insurers got better at pricing individual policies, which reduced the need to spread broad, sweeping increases across all policyholders.
That pricing sophistication matters for you personally. Drivers with clean records, newer safety features, and low-risk profiles should be better positioned to see the moderation reflected in their own renewals.
How Auto and Homeowners Rate Trends Diverged, and Then Converged
Auto insurance grabbed the headline deceleration, but homeowners was moving in the same direction. The table below summarizes where both lines stood in 2025 versus the year prior, based on the AM Best data reported by PropertyCasualty360.
| Private Passenger Auto | 9.7% | 3.7% |
| Homeowners | Higher than 8.3% (prior year) | 8.3% |
Homeowners insurance moderated too, declining to an average approved rate increase of 8.3% in 2025, down from the higher levels recorded a year earlier. That is still a steeper climb than auto, reflecting the ongoing weight of weather-related losses that have hammered property insurers in catastrophe-prone regions.
What is notable is that both lines followed a parallel arc: sharp increases through 2023 and 2024, then a meaningful pullback in 2025 as the underlying loss picture improved. The convergence suggests this is a broad market stabilization rather than an auto-specific anomaly.
One key indicator of the turnaround on the homeowners side: the loss ratio, which fell significantly between 2023 and 2025. A falling loss ratio means insurers are paying out a smaller share of premium dollars in claims. That is the financial foundation that makes rate moderation possible.
The States That Still Haven't Caught a Break
National averages mask real geographic pain. AM Best identified four states that remained outliers in 2025, still experiencing higher-than-average rate increases despite the broader national trend toward moderation.
Those states are:
Drivers in these four markets have not experienced the same relief that consumers in most other states began to feel in 2025. The reasons vary by state but generally involve a combination of regulatory filing environments, litigation exposure, population density, and localized claims trends that kept loss ratios elevated even as the national picture improved.
The SMQI consistently shows these markets generating some of the highest quoted premiums in the country, a pattern that aligns with AM Best's finding that rate filings in these states have not yet caught up to the moderation seen elsewhere.
For drivers in California, Nevada, New Jersey, and New York, the message is straightforward: the national slowdown is real, but your market is still running hot. Shopping your coverage at every renewal is not optional, it is essential.
Auto Insurers Post First Underwriting Profit Since 2020
This is the number that changes the forward-looking outlook most significantly.
In 2024, the auto insurance sector generated its first underwriting profit since 2020, when pandemic-related conditions distorted industry performance.
An underwriting profit means the industry collected more in premiums than it paid out in claims and operating expenses. That had not happened for four consecutive years. The drought ended in 2024, and the ripple effect is the moderation you are now seeing in 2025 rate filings.
Why does an industry profit matter to you as a consumer? Because insurer profitability reduces the urgency behind rate increase requests. When carriers are losing money, they file for large increases to restore margins. When they are profitable, regulators and the market both exert pressure to moderate future filings.
AM Best associate analyst Dylan Catania signaled that the trend could continue:
"Because insurers in these states experienced more favorable underwriting results in 2025, rate filings in the near future will likely reflect those positive results."
The return to underwriting profitability is not a guarantee of flat or falling premiums. But it does represent a structural shift in the pricing environment that consumers have not had on their side since before the pandemic-era claims surge began.
What this means for you
Rate moderation is real, but your individual renewal still depends heavily on your state, your insurer, and your specific risk profile. Request competing quotes before accepting any renewal offer, the Save Max Quote Index shows that shopping even one or two additional carriers at renewal can surface meaningfully different pricing. If you are in California, Nevada, New Jersey, or New York, apply extra scrutiny: your market remains an outlier. Drivers in states like Texas or Pennsylvania that have tracked closer to the national moderation trend may find more competitive options available right now.
FAQ
Are auto insurance rates actually going down in 2026?
Not exactly. The AM Best data shows that the rate of increase slowed dramatically, falling to an average approved increase of 3.7% in 2025 compared to 9.7% in 2024. Premiums remain elevated compared with pre-pandemic levels; they are just rising more slowly than in recent years.
Which states still have the highest auto insurance rate increases?
AM Best identified California, Nevada, New Jersey, and New York as states that continued to experience higher-than-average approved rate increases in 2025, even as the national trend moved toward moderation. Drivers in these markets should expect continued pressure at renewal.
What caused auto insurance rates to spike in the first place?
The large premium increases approved during 2023 and 2024 were largely a response to rising claim frequency and severity, along with inflationary pressures and elevated claims costs. Insurers needed to recover losses that had accumulated over several years.
When did auto insurers return to underwriting profitability?
According to AM Best, the auto insurance sector generated its first underwriting profit since 2020 in the year 2024. That financial turnaround is a key reason rate increase requests have started to moderate in subsequent filings.
How can I tell if I am overpaying for auto insurance right now?
Shopping multiple carriers at every renewal is the most direct check. The Save Max Quote Index tracks quote data across millions of requests, and the pattern consistently shows meaningful price variation between insurers for similar coverage profiles, even in states where average rates have moderated.
About Brooke Grissom
Brooke Grissom is an Independent Insurance Analyst at Save Max Auto, licensed in Property & Casualty and Health insurance. She covers data-driven market trends, cross-state premium comparisons, and carrier financial analysis. Read more from Brooke Grissom →
Edited by Cassidy Richey.
Methodology
This article is grounded in the source linked above. Save Max Auto data points referenced here are drawn from the Save Max Quote Index (SMQI), a proprietary instrument reflecting 3,364,317 real consumer quote requests submitted to savemaxauto.com. State and carrier rankings reflect the lifetime dataset; year-over-year shifts reflect a rolling 12-month window. The index is refreshed monthly. External authority figures referenced (NAIC, NHTSA, state regulators) reflect the most recent public data releases available at time of writing.
Sources
- Primary source: PropertyCasualty360, "AM Best: Insurance rate hikes ease as market conditions improve"