Wonder why your homeowner and auto insurance always seems to go up? Caught an interesting article this morning on what we’re going to be facing for insurance at the next time of renewal. Expect your homeowner and auto rates to jump around 9%. But keep in mind, it could have been worse.
The U.S. property/casualty industry took another underwriting loss in 2024, but results improved thanks to rate increases and changes in risk selection.
A report from industry rating agency AM Best this week said U.S. P/C insurers posted an underwriting loss of $2.6 billion in 2024 – a large improvement over the underwriting loss of $24.6 billion recorded in 2023. The estimated combined ratio for 2024 was 98.9 compared to 101.9 for 2023.
and..
The personal lines segment will be a driver of expected improvement, AM Best said. In 2024, personal lines posted a net underwriting loss of $11.9 billion compared to a loss of $36.7 billion in 2023. Rate increases in auto and home insurance, the combined ratio for auto was 98.7 (from 104.9 in 2023) and homeowners was 105.7 (from 110.9 in 2023).
AM Best said personal lines premium increased 12.9% in 2024, and is projecting to increase 9% this year. “Insurers are focusing on achieving the rate increases necessary to address their calculated rate needs, particularly for the lines of coverage such as private passenger auto and homeowners multiperil,” the agency said, adding that insurers are “prepared to withdraw from a given state entirely if needed increases are not approved.”
The industry’s predictions on what auto claims would be in 2024 (98.7) helped offset being a little off on homeowner claims (105.7), with both numbers much closer to what they predicted than the prior year. The biggest thing for consumers of homeowner and auto insurance to be aware of is that insurers are “prepared to withdraw from a given state entirely if needed increases are not approved.” Basically, insurance companies aren’t afraid to withdraw from a market if they can’t charge enough for the risk they’re signing on to assume. That’s why people can be challenged to find homeowners insurance in California due to wildfire. And, massive hailstorms in western South Dakota don’t help our situation.
It’s literally a game of predictive modeling, trying to predict the unpredictable. When those ratios are around 100, they were spot on with what the predictions were, and that what they charged for insurance will cover the claims and costs. If not.. well, that’s when rates go up, or insurers pull out of the market entirely.
Just something to keep in mind the next time you get that insurance bill.