According to a Vox report from February, car insurance rates are 20% higher than a year ago. Worse still, they are 38% higher since January 2020. While this is terrible news for consumers, it’s excellent news for property and casualty (P&C) insurance stocks. 

While some of the reasons are understandable—higher car prices and more expensive car repairs are two that stand out—other possible causes include increased dangerous driving leading to worse accidents and vehicle damage. A lack of traffic violation data, resulting from law enforcement reducing traffic safety enforcement to avoid racial biases, has also contributed to the steep escalation in prices.

Experts suggest insurance costs in 2024 won’t rise nearly as much as in recent years. 

“‘You had this problem where the insurance companies fell behind, so the prices didn’t match the costs and they were losing a bunch of money,’ another insider told me. Rates rose in an attempt by insurance companies to catch up with costs, but now inflation isn’t growing at the same runaway clip and insurers aren’t seeing the same levels of loss,” Vox contributor Marin Cogan wrote. 

Just because premiums won’t rise at the same pace doesn’t mean that P&C insurance stocks aren’t a good investment. Here are three that I particularly like. 

Berkshire Hathaway (BRK-A, BRK-B)

Most investors who follow Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) are familiar with the story of how Warren Buffett used his insurance companies’ float — defined as the difference between the premiums it collects today and the claims it pays out tomorrow — to invest for the benefit of his holding company and its shareholders. 

In 1967, Berkshire’s float was $16 million. By 2009, it had grown to $62 billion, and in 2023, it more than doubled to nearly $169 billion. That represents a compound annual growth rate of 4.3% over 56 years. It might not seem like much, but it’s essentially free money that Berkshire uses to deliver much higher returns for its shareholders.

Everyone and their dog has tried to duplicate what Berkshire has successfully employed over nearly six decades. It’s brilliant.

“Property-casualty insurance (“P/C”) provides the core of Berkshire’s well-being and growth. We have been in the business for 57 years and despite our nearly 5,000-fold increase in volume – from $17 million to $83 billion – we have much room to grow,” Buffett stated on pg. 14 of its 2023 annual report.  

I never get bored learning about all the reasons Berkshire Hathaway has broken the mold in American business. 

Progressive Corp. (PGR) 

Progressive Corp. (NYSE:PGR) is the pride of Cleveland, Ohio. Most non-investors are probably more familiar with Flo, Progressive’s long-time character in the P&C company’s quirky and humorous TV ads. If you haven’t read the September 2023 article in The New York Times about Stephanie Courtney — the actress who plays Flo —  you should.

When it comes to insurance stocks, PGR is about as good as it gets. Over the past 15 years, it’s outperformed both its P&C peers and the overall U.S. stock markets consistently. Year-to-date through Mar. 5, its total return is 19.70%, which is 525 basis points higher than the P&C industry. Over the past three years, the total return differential has widened to 1,366 basis points.

In June 2018, I suggested that the P&C insurer should be in the Dow Jones Industrial Average, concluding my argument by saying, “Great CEO. Great company. Great stock.” Nothing’s changed in the five-and-a-half years since except that PGR has appreciated by 210%, 2.4x the S&P 500.

I encourage you to read CEO Tricia Griffith’s 2023 shareholder letter. She is one of the most exceptional CEOs in America.  

“We ended 2023 with a combined ratio (CR) of 94.9, which was better than our profitability goal of achieving an aggregate calendar-year CR at or below a 96.0. This achievement was a herculean effort by the entire organization especially since our CR was 99.7 through the first six months of the year,” Griffith wrote.  

For those unfamiliar, CR indicates a P&C company’s underwriting profitability. You want it to be below 100. Progressive’s long-standing goal is to grow the business as fast as possible while providing top-notch customer service and still delivering a CR of 96 or lower.  It seemingly does that every year. 

Intact Financial (IFCZF)

Intact Financial (OTCMKTS:IFCZF) makes this list for two reasons. 

First, it’s an excellent P&C company. Secondly, it’s a Canadian company that can compete with the best of them. As a Canadian, I rarely get to promote a great success story from my own country. The Toronto-based company is the largest P&C provider in Canada, with a 20% market share. It also has a robust global specialty insurance business and, together with RSA Insurance, is a leader in the UK and Ireland markets.

For you dividend lovers, it has increased its annual payout every year since it went public in 2004. At one time, Dutch financial services giant ING Group (NYSE:ING) controlled it. However, ING sold off its remaining position in 2009. It’s been independent ever since, run by CEO Charles Brindamour, who has been with Intact since 1992.  

Intact has grown through a combination of organic sales and many acquisitions. Although its acquisition of the RSA Insurance Group in 2021 was the company’s largest—it combined with Tryg A/S, a Danish insurer, to buy the UK company for 7.2 billion British pounds ($9.2 billion)—it significantly increased its total annual premiums. In 2023, they reached 22.37 billion Canadian dollars ($16.57 billion), 5% higher than a year ago. 

In 2023, its CR ratio was 94.2% company-wide, seven basis points less than Progressive’s. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.