Matic has published its mid-year premium trends study, which examines trends in homeownership from 2024’s first half. The report highlights significant challenges faced by homeowners, mortgage entities, and the housing market as a whole due to record premium increases, ongoing new business restrictions, and carrier exits. It draws from a dataset of 36 million quote requests, 10 million properties, and external quoting engines.
According to Matic research, one reason for these market disruptions may be the very high number of catastrophic events in 2023—28 U.S. weather disasters costing billions of dollars—which set a new record. These factors, along with an increase in the population in high-risk areas, have made the market unstable and made it difficult for insurers to make ends meet.
The report’s main conclusions include the continuation of carrier withdrawals from high-risk areas and new business constraints, which started in 2023 and lasted until the first half of 2024. The average number of house insurance quotations accessible per person nationwide decreased by 27% between June 2023 and June 2024, partly due to regulatory obstacles.
The availability of quotes peaked in March 2024 and then steadily increased in May and June. Unsustainable loss rates have forced insurers to reduce business as a result of premium change request delays, denials, or regulatory caps. 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 research also shows that two-thirds of residences have inadequate insurance, mostly as a result of insurance policies that do not account for recent modifications made to the property or the cost of reconstruction. The report’s data emphasizes this problem by showing that coverage quantities aren’t increasing at the same rate as rates. Following substantial increases in Coverage A, or residential coverage, from 2021 to 2022, these increases started to taper off in 2023 and kept going down until 2024. For instance, when a homeowner purchased insurance in 2021, their premium increased by $253 and their Coverage A increased by $33,500 when they renewed their policy in 2022. But only Coverage A saw a $13,700 rise at their 2024 renewal—their premium had gone up by $445.
Both new business and renewal plans have seen new records for premium increases year to date for states where rate rises were approved. In the first half of 2024, homeowners saw an average premium increase of 17.4% for new policies; this was in contrast to increases of 11.6% in 2023 and 5.9% in 2022. Even more dramatic increases were observed by homeowners who continued to use the same insurer and policy year after year; individuals who bought a policy in 2021 are 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 research highlights recent legislative actions, such as the Insurance Data Protection Act and the INSURE Act, that are intended to stabilize the home insurance market. The enactment of this legislation demonstrates an increasing understanding of how widely the unstable insurance market affects people. Furthermore, a change towards more stringent oversight and enforcement has been indicated by Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac emphasizing the value of following property coverage standards for mortgages. In order to ensure that homes and mortgage firms are adequately secured, better tracking methods are obviously required, even though several regulations have been put on hold to address compliance issues.
The influence of the unstable insurance market on the mortgage business is also covered in the paper. According to 63% of lenders, at least one borrower they recently worked with experienced trouble getting home insurance. They cited problems such borrowers needing to lower the mortgage they could afford and debt-to-income ratios getting too high once insurance costs were taken into account. Furthermore, only sixteen percent of lenders said they felt extremely educated about the insurance market.
“Changing market dynamics are not only affecting homeowners but also continue to put significant strain on the mortgage industry,” Madick said. “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 difficulties at hand, the report highlights encouraging developments. With predictions falling to 98.5% for both 2024 and 2025, the combined ratios for the Property and Casualty (P&C) insurance market are predicted to improve and point in the direction of profitability. The cost of building is decreasing, as the price of lumber has decreased by 18.9% in the past year. The average number of quotes available per individual nationwide increased from 0.77 in March to 1.07 in June, suggesting that carriers are starting to loosen limitations. In order to navigate and mitigate these problems, the paper points out that coordinated actions from insurers, regulators, and the mortgage industry are crucial.
To read the full report, including more data, charts, and methodology, click here.
