Two-Thirds of Homes Underinsured, Matic Reports

(Image courtesy of Matic)

Matic, Columbus, Ohio, released its mid-year premium trends report, finding that approximately two-thirds of homes are underinsured, largely due to insurance policies that fail to reflect construction costs or home improvements.

“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.”

In general, the home insurance industry continues to see significant challenges.

Last year saw 28 billion-dollar weather and climate challenges in the U.S., passing the record set in 2020, and many insurers are implementing further restrictions and withdrawing from certain markets.

Currently, approximately 6 million homeowners lack insurance–Matic noted that in some cases, that might reflect a decline in policy options. The number of available insurance quotes per person fell to 1.07 in June, a 27% decrease year-over-year.

However, June’s number is up from the low of 0.77 quotes per person in March.

Premiums for new policies were up 17.4% in the first half of 2024, compared with 11.6% in the same period in 2023 and 5.9% in 2022.

Moreover, renewal premiums have risen significantly–the average homeowner who bought a policy in 2021 is now paying 69% more in 2024.

For lenders, 63% reported that at least one borrower they recently worked with had a home-insurance related issue. One common issue cited was debt-to-income rations becoming too high once the cost of insurance was factored in.

However, only 16% of lenders feel very knowledgeable about the insurance industry, and 66% said they want to learn more to better assist their customers.

There are some more optimistic indicators in the industry, Matic noted. For example, it’s currently anticipated that the P&C insurance industry’s combined ratios–an indicator of profitability–will drop to 98.5% in 2024 and 2025. That’s more promising than the 102% achieved in 2023–indicating companies are paying out more than they’re receiving.