Homeowners insurance outlook: insurers paid out a staggering $100 billion last year


Home insurance companies are being battered by a costly combination of severe storms and high inflation. They just had their worst year in a decade, with storms costing their business over $100 billion—and customers are suffering for it in the form of higher prices and fewer options, as some companies choose to exit risky markets altogether.

A new report from S&P Global Market Intelligence found that American home insurers posted their worst year since 2011 last year, recording a net combined ratio—or proportion of their total losses to the premiums they collected—of 110.5% (anything above 100% represents a net loss). That represents more than a $101 billion loss overall.

“Inflationary pressures, a devastating wildfire in Hawaii and a record-breaking number of billion-dollar loss events from convective storms weighed on the industry’s results in 2023,” said the report.

High inflation has driven up the cost to pay out customers’ claims and has made the reinsurance policies companies buy to protect themselves from losses more expensive. Further, a string of severe storms that caused massive property damage weighed down the industry: Wildfires in Hawaii in August 2023 alone, for example, cost insurance companies $61.5 billion. 

As dangerous storms become more prevalent and costly, market conditions aren’t getting any better for the $152 billion home insurance industry.

S&P found that only two of the 20 largest homeowners insurance providers in the country—Chubb and America Mutual Insurance—made money on their home insurance lines last year. Losses across the board have forced insurers to raise rates, passing their costs on to consumers. Increasing prices is the easiest lever insurance companies have to boost returns: Homeowners across the country have faced 10-12% price hikes over the past year, far exceeding inflation. 

In some markets, home insurers have ceased business entirely, citing operating costs: In Florida, one of the costliest markets nationwide because of its exposure to Atlantic hurricanes, nine insurers folded or merged with competitors between 2021 and 2023. That lack of competition has only further pushed premiums upward. Other factors have included inflation, more frequent storms, and high price trends in the reinsurance market. Insurers have been paying high rates for policies that protect them in case they take huge losses on a single storm.

“Insurance premiums being charged in the state of Florida have skyrocketed over the last couple of years. Part of it is the reinsurance costs,” Florida State University professor and insurance expert Charles Nyce told Fortune. “Over the last couple of years, it’s been really expensive, and some insurance companies can’t get it at any price.”

Last year’s hurricane season was relatively mild, which boosted companies’ returns in Florida, one of their biggest markets. But meteorologists are expecting this hurricane season to be exceptionally costly.

“The 2024 Atlantic hurricane season is forecast to feature well above the historical average number of tropical storms, hurricanes, major hurricanes, and direct U.S. impacts,” AccuWeather Lead Hurricane Forecaster Alex DaSilva wrote in a March forecast. “All indications are pointing toward a very active and potentially explosive Atlantic hurricane season in 2024.”

Major hurricanes are far from the only threat, though. Recent deadly hailstorms in Texas and Oklahoma and threats of wildfires out West underscore how more common perils can present costly threats for insurance companies, too—and these types of weather events are only getting more common, turning the screws on insurers even more.

“There’s definitely an increased perception of the threat from climate risks,” insurance industry analyst Steve Evans told Fortune.

Source link

Recommended Posts


Interactive Graphic Novel ‘Songs of Travel’ Is Out Now on iOS for No cost Next Its Debut on Android Before This Thirty day period – TouchArcade

Causa Creations was initially going to start its interactive graphic novel Music of Travel (Cost-free) on iOS and Android concurrently on Could 9th. Songs of Vacation strike Android, but the iOS variation had been delayed. Currently, Tunes of Journey has at last absent stay all over the world on iOS for totally free. If you […]


A toddler was trapped in a Tesla soon after its battery died devoid of warning amid document heat waves—’safety comes last’ at Tesla, skilled suggests

A 20-month year outdated woman in Arizona was a short while ago locked within a Tesla Product Y after the car’s battery died, producing a “life threatening situation” in which firefighters had to split open up the door with an ax to rescue her.  Renee Sanchez, the girl’s grandmother, loaded the girl into her vehicle […]


Does Medicare cover breast reduction medical procedures?

Breast reduction operation, also identified as reduction mammaplasty, requires the elimination of pores and skin and tissue from the breasts, then reshaping them to a more compact size. This variety of medical procedures has been on the increase since the pandemic. Cosmetic breast reduction surgeries—those that had been not regarded medically essential and compensated for […]