Home Insurance Market Begins To Stabilize Amid Ongoing Climate and Regulatory Uncertainty

Columbus, Ohio, November 20, 2024 (GLOBE NEWSWIRE) — Matic, a leading digital insurtech platform, today released its annual year-end trends and predictions report, analyzing key trends in the home insurance landscape and their implications for homeowners and the mortgage industry. Drawing on data from 36 million quote requests, 10 million properties, and external quoting engines, the report offers insights into 2024’s major developments, along with predictions for 2025.

The findings highlight that while climate risks and regulatory pressures continue to pose challenges, the market is showing early signs of stabilization. Premium growth slowed significantly in the latter half of 2024, with new policies seeing average rate increases of 6.6%, compared to 10.7% in the first half of the year.

“We’re seeing signs of improvement in the home insurance market , driven by a few key factors,” said Ben Madick, CEO and Co-founder of Matic. “Inflation has started to slow, easing the pressure on repair and claims expenses. On top of that, many carriers received long-awaited approvals for rate increases, which has helped them align premiums with current costs and return to profitability.”

This shift has prompted large national carriers to re-enter previously restricted states. As a result, the average number of quotes available per person increased by 60% compared to the year’s low point in March.

The report notes that 2025 could bring a more balanced market if inflation remains under control and severe weather events are limited. That said, climate risks remain highly unpredictable. In 2024, Hurricanes Helene and Milton caused $55 billion in damages, highlighting the uncertainty surrounding climate-related losses. As one strategy to manage claims expenses, insurers are increasingly moving from replacement cost to actual cash value (ACV) for roof coverage.

Flood risk is also a growing concern, extending beyond coastal areas. Events like the flooding in western North Carolina from Hurricane Helene reveal that proximity to water is no longer the sole indicator of flood risk. In response, the industry is expected to focus more on educating homeowners about flood insurance and evaluating the effectiveness of the National Flood Insurance Program (NFIP) and private flood insurance sector.

For consumers, re-entry by major carriers is likely to bring increased competition and more policy options. However, regulatory challenges could still slow progress. State regulators, cautious after recent rate increases, may hesitate to approve further adjustments, potentially constraining insurers’ ability to manage inflation or climate-related cost surges.

The report indicates that bundling home and auto policies continues to be a common strategy for carriers to spread risk, though it may not always yield the most competitive rates for homeowners. Additionally, the Excess and Surplus (E&S) market is stepping up to fill coverage gaps in high-risk areas where traditional carriers are limited.

For mortgage lenders, the high cost of insurance remains a pressing issue, directly impacting borrowers’ debt-to-income (DTI) ratios and their ability to qualify for loans. In a recent Matic survey, 63% of lenders reported that at least one borrower they recently worked with struggled to secure a suitable insurance policy, often leading to delayed closings or disrupted home purchases.

“While the industry is beginning to stabilize, premiums remain at record highs, and interest rates are expected to stay elevated through 2025,” said Madick. “To address these challenges, mortgage lenders are integrating their closing processes with Matic’s insurance marketplace to help their borrowers compare options, find affordable rates, and increase the likelihood of meeting DTI requirements.”

Visit matic.com to read the full report with additional data and details on the methodology.