Matic: Home Insurance Challenges Persist

(Image courtesy of Matic)

Matic, Columbus, Ohio, released its latest report on the state of the home insurance industry, finding that factors such as climate change, availability and costs continue to weigh heavily.

In terms of natural disasters, Matic reported that final numbers from 2023 show a record 28 billion-dollar weather and climate disasters. The previous high was set in 2020.

In 2024, trends that started in 2023 have persisted–and insurers have continued to limit new policies in some cases. Matic noted that approximately 6 million homeowners currently lack insurance

Problems don’t just stem from homes being uninsured, however. Matic pointed to research that indicates approximately 66% of homes are underinsured, largely due to homeowners not updating their policies to reflect reconstruction costs or improvements they’ve made.

The average number of insurance quotes available per person fell to 1.07 in June, a 27% decrease year-over-year. However, that’s still above the low point of 0.77 quotes in March–gradual improvement there may point to some stabilization.

Regulatory approval has played a role in whether carriers have been able to increase premiums. But in cases where they were allowed, premiums for new policies grew by 17.4% in the first half of 2024. That compares with 11.6% in 2023 and 5.9% in 2022.

For renewal premiums, the average homeowner who bought their policy in 2021 is now paying 69% more in 2024.

There are some promising signs, however, Matic said. It’s projected that the P&C industry will see combined ratios–an indicator of profitability–drop to 98.5% for 2024 and 2025. That’s a notable improvement from 102% in 2023.

The home insurance combined ratio hit a 15 percentage-point improvement in Q1 2024, indicating that rate increases are beginning of offset insurers’ losses.

For mortgage lenders, this overall environment continues to notable implications. When surveyed, 63% of lenders reported at least one borrower they recently worked with had a problem securing home insurance, such as debt-to-income ratios being too high once insurance was factored in.

Only 16% of lenders reported feeling very knowledgeable about the current insurance landscape, and 66% said they want to learn more.