Report Reveals Continued Surge in Home Insurance Premiums As Regulators Navigate Impact of Volatile Market
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By Matic
Columbus, Ohio, July 23, 2024 (GLOBE NEWSWIRE) — Matic, a leading digital insurtech platform, today released its mid-year premium trends report, which analyzes home insurance trends from the first half of 2024. Drawing from a dataset of 36 million quote requests, 10 million properties, and external quoting engines, the report highlights significant challenges faced by homeowners, mortgage entities, and the housing market as a whole due to record premium increases, continued new business restrictions, and carrier exits.
The report notes that these market disruptions stem in part from the unprecedented frequency of catastrophic events in 2023, which included 28 billion-dollar U.S. weather disasters, a new record. These conditions, coupled with a rising population in high-risk areas, have created a volatile market where insurers struggle to cover costs.
Key findings from the report include the persistence of new business restrictions and carrier withdrawals from high-risk markets, a trend that began in 2023 and continued into the first half of 2024. Driven in part by regulatory challenges, the average number of home insurance quotes available per person nationally fell by 27% from June 2023 to June 2024. Quote availability reached its lowest point in March 2024 before gradually improving in May and June. Insurers, grappling with premium change request delays, denials, or caps imposed by regulators, have been forced to scale back business due to unsustainable loss ratios. States such as California that struggle with both weather disasters and a challenging regulatory environment have seen additional carrier exits in 2024, though some carriers are beginning to lift restrictions in other states as financial performance improves.
The report also highlights that two-thirds of homes are underinsured, largely due to insurance policies that fail to reflect current reconstruction costs or home improvements. Data from the report underscores this issue, indicating that coverage amounts aren’t keeping pace with rising premiums. After Coverage A, or dwelling coverage, experienced sharp increases from 2021 to 2022, these increases began to slow in 2023 and continued to decline into 2024. For example, a homeowner who bought an insurance policy in 2021 saw their premium rise by $253 and Coverage A increase by $33,500 at their 2022 renewal. However, at their 2024 renewal, their premium had increased by $445, while Coverage A only rose by $13,700.
For states where rate hikes were approved, both new business and renewal policies have experienced new records for premium increases year to date. Homeowners faced an average 17.4% premium increase for new policies in the first half of 2024, compared to 11.6% in 2023 and 5.9% in 2022. Homeowners who stayed with the same carrier and policy each year experienced even steeper increases, with those who purchased a policy in 2021 now paying 69% more in 2024.
“The combination of climate change, regulatory challenges, and inflation has created a perfect storm, leaving many homeowners without the coverage they need,” said Ben Madick, CEO and Co-founder of Matic. “American homes are increasingly underinsured, highlighting the need for the insurance industry and regulators to collaborate on solutions.”
The report points to recent regulatory initiatives that aim to stabilize the home insurance market, such as the INSURE Act and Insurance Data Protection Act. The introduction of this legislation indicates a growing recognition of the widespread impact of the volatile insurance market. In addition, Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac have emphasized the importance of adhering to property coverage requirements for mortgages, signaling a shift towards stricter monitoring and enforcement. Although some rules have been paused to address compliance challenges, there is a clear need for improved tracking systems to ensure homes and mortgage companies are sufficiently protected.
The report also covers findings on the impact of the volatile insurance market on the mortgage industry. 63% of lenders reported that at least one borrower they recently worked with had a problem securing home insurance, citing issues such as debt-to-income ratios becoming too high once the cost of insurance was factored in and borrowers needing to lower the mortgage they could afford. Additionally, only 16% of lenders indicated that they felt very knowledgeable about the insurance landscape.
“Changing market dynamics are not only affecting homeowners but also continue to put significant strain on the mortgage industry,” said Madick. “Mortgage entities should be aware of the latest trends, as rising premiums are increasingly determining if and when a loan is approved. Working with an insurance marketplace like Matic can help offset some of the increased costs we’re seeing.”
Despite the current challenges, the report notes signs of improvement. The projected combined ratios for the Property and Casualty (P&C) insurance industry are expected to improve, with estimates dropping to 98.5% for both 2024 and 2025, indicating a path towards profitability. Construction costs are moderating, with lumber prices down by 18.9% since last year. Additionally, there are indications that carriers are beginning to ease restrictions, with the average number of quotes available per person nationally increasing from 0.77 in March to 1.07 in June. The report notes that coordinated efforts from insurers, regulators, and the mortgage industry are essential for navigating and mitigating these challenges.
Visit Matic to read the full report with additional data and details on the methodology.
About Matic
Since 2014, Matic has changed the landscape of the insurtech industry by integrating insurance within the home and auto ownership experience. Today, Matic’s digital insurance marketplace has over 50 home and auto carriers, as well as distribution partners in industries ranging from mortgage origination and servicing to banking, real estate, personal finance, and more. With a single-minded focus on advocating for policyholders, Matic has created an easy and transparent shopping process, saving customers hours of work and over 30% in premiums each year. For more information, visit matic.com.
