Around the Industry: Home Insurance Market Valuation is on the Rise (December 2025)
Reading time • 1 min
By Matic
Home insurance industry financials lead headlines this month, with mostly good news as the year comes to a close. Market growth is expected to steadily increase over the next several years, while AM Best released a new, positive rating for homeowners coverage within the broader insurance industry. For individual homeowners, opting for higher deductibles is an increasingly common strategy to lower premiums.
Home insurance market valuation is on the rise
New data reveals that the home insurance industry is set to have a CAGR of 8.32% over the next six years. In 2024, this subset of the insurance market was valued at $276.65 billion and could reach over $524 billion by 2032. Mortgage lenders and servicers that incorporate an embedded insurance platform could benefit from this potentially increasing revenue source.
Moderating premiums improve home insurance industry rating
Although the last several years have been challenging for the home insurance industry, AM Best has acknowledged improvements by updating its outlook from negative to stable. The primary drivers of the change include moderating premiums, better catastrophe risk management, and an improved property reinsurance market. While insurers and homeowners still face obstacles, the industry isn’t as volatile as it has been in the recent past.
Homeowners opt for higher deductible to lower premium costs
Nearly half of homeowners saw their home insurance premiums rise over the last year, causing some people to opt for a higher deductible in order to offset annual costs. In fact, the average deductible has jumped 40% in just the past two years. This strategy is most common in the Midwest where increasing hail storms are driving up home insurance prices.
Wildfire regulations delayed in California, premiums stabilize in Florida, and Colorado civil lawsuit blames oil companies for insurance price hikes
- New wildfire regulations in California experience delays from state agency: Although Governor Gavin Newsom set a year-end deadline for new wildfire regulations, the state’s Board of Forestry and Fire Protection will not move forward with the project until March 2026. The goal is to create ember-resistant zones around homes in high-risk areas by removing combustible material from within five feet of a home, but there is disagreement on how to enforce the requirements.
- Legal changes in Florida have resulted in stabilizing premiums: Instead of experiencing double-digit growth in policy prices, the average premium increased just 6% over the last year. The state credits new laws with the improvement, including reduced litigation costs and shorter claims timelines.
- Washington state lawsuit links oil companies to climate deception: A class action suit centers around two homeowners who claim years of deception from oil companies has caused climate change and, consequently, rising home insurance premiums. It’s the first lawsuit of its kind, although there is a new trend of climate accountability litigation occurring throughout the country.
