Report Reveals Continued Surge in Home Insurance Premiums As Regulators Navigate Impact of Volatile Market
23 Julio 2024 - 11:00AM
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.
Matic
press@matic.com