Car insurance is up 28% since 2023. Insurers just posted their best year in a decade.

Unlike Social Security or Medicaid, nobody runs auto insurance out of a federal budget — it's a private market, priced state by state, company by company.▸ But it behaves like a system with its own internal ledger: when claims cost more than premiums bring in, rates rise until they don't. That ledger just flipped from the worst deficit in 30 years to the best surplus since before the pandemic — and premiums haven't caught up to the flip.

Insurers track their own health with a single number: the combined ratio, what they pay out in claims and expenses for every dollar of premium they collect.▸ Above 100 cents is an industry-wide loss; below is a profit.

In 2022, insurers spent 112 cents in claims and expenses for every dollar of premium they collected — the worst result in at least three decades, per AM Best figures reported by Insurance Journal, and the reason rates rose so sharply afterward.▸ The industry lost $17 billion on auto underwriting in 2023 alone, according to AM Best. Then the pricing caught up: by 2024, insurers were down to 95 cents spent per premium dollar, producing nearly $14 billion in net underwriting income — their best result since before the pandemic, per the Insurance Information Institute — and industry trackers report the turnaround extending through 2025. Measured a broader way — folding in investment income alongside underwriting — AM Best put the segment's full 2024 net operating profit at $37.6 billion, which the same AM Best report, as reported by Agency Checklists, calls "the greatest profit for the segment in a decade." That decade-level superlative belongs to the $37.6 billion figure, not to the (smaller, underwriting-only) $14 billion one, which is best read against the pandemic era specifically.

Rate increases don't reverse when insurers turn a profit; they just slow down.▸ Premiums kept climbing through the entire period shown above, including the two years insurers were already back in the black.

Compounded, a 5% jump in 2023, 18% in 2024, and 3% in 2025 — The Zebra's own tracked national average annual premium, which rose from $1,759 in 2022 to $1,851 (2023), $2,189 (2024), and $2,256 (2025) — adds up to about 28% in three years — even though the underlying reason insurers gave for raising rates (three years of losses) was fully resolved by the second of those years.▸ That's a slower cumulative climb than industry losses alone might suggest, and the pace has already decelerated sharply (from an 18% jump in 2024 to 3% in 2025): a deceleration, not a rollback — nothing in the data points to premiums coming back down.

The costs behind the 2022-2023 losses didn't come from more crashes — they came from crashes costing more to resolve.▸ Two forces, tracked separately by insurers and reinsurers, get most of the blame. Nuclear verdicts — jury awards over $10 million — hit 135 cases against corporate defendants in 2024, the most since Marathon Strategies started tracking them in 2009. And third-party litigation funding, where outside investors bankroll lawsuits in exchange for a cut of the settlement, is a market Swiss Re projects will reach $31 billion by 2028, and which gives plaintiffs less incentive to settle quickly or cheaply. By 2025, 76% of U.S. consumers said damage awards were too low or about right, up from 58% in 2016, per Swiss Re's jury-attitude research — public sentiment moving in the same direction as the verdicts.

Combined-ratio and underwriting-income figures are industry-wide aggregates for private passenger auto; individual insurers and states vary widely. The cumulative premium figure is a compounded estimate from reported annual national averages, not a single reported statistic.