Insurance premiums of American homeowners rose last year, with rates increasing by more than 20 percent in six states, according to a recent report from S&P Global.
In 2024, insurers raised rates by 10.4 percent as of Dec. 27, which followed a 12.7 percent hike in the previous year, according to the Jan. 21 report from the company.
In total, 33 states saw premiums climb by double digits last year, with the largest spike seen in Nebraska at 22.7 percent. Premiums in Iowa, Minnesota, Montana, Utah, and Washington jumped by more than 20 percent.
Florida had the lowest premium increase at just 1 percent, followed by Texas at 3.4 percent and Nevada at 4.3 percent.
Among the largest 10 private homeowners insurers in the country, American Family Insurance Group implemented the biggest premium rate hike last year at 16.5 percent. This was followed by Liberty Mutual Holding Co. Inc. and the Progressive Corp.
In July 2024, the Insurance Information Institute attributed the rise in homeowners insurance costs to a combination of high inflation and increasing natural catastrophe losses.
“Much like Americans are experiencing higher prices for virtually all material goods, a key driver for homeowners insurance has been around the likes of construction materials, which are an important element used when insurers help customers rebuild after catastrophe strikes,” said the institute’s CEO, Sean Kevelighan.
He said the institute’s analysis revealed that “cumulative replacement costs related to homeowners insurance soared 55 percent between 2020 and 2022.”
Even prior to the pandemic, insurers were struggling to remain profitable as rising costs made this challenging, the organization noted. In 2023, insurers paid out almost $1.11 in claims and expenses for every dollar they took in.
“Insurers play a vital role in the economy, protecting against financial losses due to unforeseen events such as natural disasters,” said Kevelighan. “However, if insurance companies were to become unprofitable and unable to meet their financial obligations, it leaves policyholders without coverage when they need it most.”