Property & Casualty Insurance Carriers NAICS 524126

Jun 9, 2025 - More American Homeowners Forgoing Insurance

• The increasing cost of homeowners insurance has some Americans choosing to do without it altogether, according to the Federal Reserve’s Economic Well-Being of US Households of 2024 report. Of the 12,000 homeowners surveyed across the country, about 7% said they have no insurance, citing either unaffordability (43%) or not finding insurance worth it (19%). The analysis also found that 30% of low-income homeowners - those making less than $25,000 a year - are more likely to forego insurance. Watchdog group Consumer Federation of America found a similar 7.4% uninsured rate last year in their own study, which translates to 6.1 million US homes without any coverage. There is also a correlation between uninsured homeowners and foreclosures, according to climate risk consulting firm First Street. Insurance costs have jumped to more than 20% of a mortgage payment in 2022, per First Street, triple the 7%-8% rate in 2013.
• US homeowners have had their insurance premiums go up by 24% over the past three years, according to a report from the Consumer Federation of America (CFA). Between 2021 and 2024, typical homeowners insurance premiums have risen by an average of $649 per customer. On a national level, that translates to a $21 billion price increase for homeowners insurance during the same time period, more than double the rate of inflation. The CFA found that premiums went up for 95% of US zip codes with the biggest increases coming from Utah (up 59%), Illinois (+50%), Arizona (+48), and Pennsylvania (+44). The most expensive states to insure a home were Florida, Louisiana, Oklahoma, Kentucky, and Nebraska. The steep price increases and the inability by some customers to find proper insurance in areas prone to natural disasters are creating an unsustainable affordability crisis in home insurance, according to the CFA report.

• Traditionally regulated insurers are leaving the market high-risk areas, and thinly capitalized companies that don’t meet normal regulatory standards are filling the gap, according to former Federal Reserve governor Sarah Bloom Raskin. Banks, which require homeowner insurance, accept this form of insurance because banks and other mortgage lenders seldom hold onto the mortgage paper, according to The American Prospect. The market share of homeowner insurance in Florida provided by these lightly regulated insurers grew to 50 percent by 2018, according to a Harvard Business School (HBS) report titled When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets. A new, nontraditional rating agency called Demotech gives these companies high ratings. At least 15 of these Demotech-approved insurers became insolvent during the period of the HBS study, according to Professor Ishita Sen, one of the report authors.
• Increasing loss severity for casualty lines such as commercial auto, professional liability, product liability, and directors and officers (D&O) liability has in most cases outstripped economic inflation by at least double, with social inflation the largest cause of adverse loss development, according to AM Best. Social inflation is a term that describes how insurers’ claims costs are increasing above general economic inflation. This is generally thought to be due to a trend in increasing litigation costs brought by plaintiffs seeking large monetary relief for their injuries. The “social” aspect of the term represents shifting social and cultural attitudes about who is responsible for absorbing risk (the insurer or the plaintiff). The average loss severity increase over the past decade to 2023 in the product liability line, for example, was 20.4%, compared with average annual economic inflation of 2.7%. The AM Best report notes studies that have shown sentiments toward major public corporations have become more unfavorable, allowing attorneys to capitalize on the shifting attitudes. This decrease in confidence in big business and in other institutions (e.g., federal government, banks), is a problem for insurers, AM Best notes, because jury verdicts have shown that many jurors believe that a company bears some responsibility even in cases of injury due to misuse of a product.