Commercial Auto Underwriting Results Show Signs of Long-Awaited Improvement: AM Best

Improved physical damage performance and easing loss reserve development pushed commercial auto underwriting metrics to their best level in a decade, according to AM Best.
By: | November 4, 2026
commercial auto fleet

Commercial auto insurers reported their best underwriting performance since 2021 in 2025, with the mid-year 2026 loss ratio hitting its lowest point in five years, according to AM Best.

The line’s net underwriting loss narrowed to $2.2 billion in 2025 from $4.9 billion in 2024, while net premiums written rose 6% year over year to $65.8 billion, AM Best said. The operating ratio fell to 96.6 in 2025, the lowest of any year in the past decade excluding the peak COVID years, when fewer vehicles were on the road.

Despite the gains, AM Best noted that commercial auto remains a hard-market outlier compared with broader property & casualty lines, where pricing has softened, and underwriters still need further improvement to approach breakeven results.

Liability and Physical Damage Diverge Further

The report found a widening gap between the line’s two main components. Auto liability, which made up 77% of total commercial auto net premiums written in 2025, posted an underwriting loss of more than $4.6 billion that year, with a combined ratio of 108.6. AM Best said social and economic inflation trends continue to push liability claim costs higher, driven by a growing share of claimants represented by attorneys, more aggressive plaintiff strategies, higher jury awards and rising repair costs for cameras, sensors and advanced driver-assistance systems. The average loss per claim climbed to $31,537 in 2025 from $28,771 in 2024, AM Best data showed.

Physical damage coverage, by contrast, generated an underwriting profit exceeding $2 billion in 2025, with a combined ratio of 83.2, down from 88.6 in 2024, according to the report. AM Best attributed the improvement partly to proactive fleet monitoring and maintenance that has reduced accident frequency, even as the cost to repair newer vehicles has risen.

The gap between the two components of commercial auto widened further in the first half of 2026: the direct loss ratio for liability stood at 70.6 compared with 49.4 for physical damage, AM Best said, adding that the divergence could deepen if policyholders increasingly opt for higher deductibles or self-insured retentions on physical damage coverage to save money.

Reserve Deficiency Narrows as Pricing Growth Slows

Adverse prior-year loss reserve development, long a persistent drag tied to social inflation, eased substantially in 2025, adding just four points to the calendar-year loss ratio compared with roughly seven points in prior non-COVID years, AM Best found. In dollar terms, adverse development on commercial auto liability totaled just under $2 billion in 2025, the lowest since 2018.

More than half of that development stemmed from accident year 2023, while development tied to accident years 2021 and earlier totaled only $97 million, which AM Best said suggests older accident years are now adequately reserved. Overall reserve deficiency, which stood at an estimated $4 billion to $5 billion at year-end 2024, narrowed to roughly $2 billion to $3 billion at year-end 2025, according to the report.

That improvement has coincided with slowing price increases. AM Best said second-quarter 2026 pricing increases for commercial auto were the lowest in more than 10 years and only moderately above core inflation levels, a shift from a decade marked by 60 consecutive quarters of rate increases, at times in double digits.

Progressive Leads as Focused Insurers Outperform

Progressive Insurance Group remained the largest commercial auto insurer by a wide margin in 2025, writing more than double the direct premium of second-ranked Travelers Group, even as Progressive trimmed its book by 5.7%, according to AM Best.

Eleven of the top 20 insurers improved their results in 2025 compared with 2024, and the top three carriers, representing over 25% of the market, all improved their combined ratios. Progressive and Old Republic Insurance Group were the only insurers among those with heavy commercial auto concentration to post combined ratios below 100 in each of the past five years, AM Best said, while Acuity recorded the second-lowest combined ratio in 2025 behind Progressive.

Obtain the full report here. &

The R&I Editorial Team can be reached at [email protected].

More from Risk & Insurance