Category Archives: Market Conditions

Auto Insurance, Insurers and the Economy, Market Conditions

Oil Prices Might Reduce
Accidents, But Severity Would Offset Impact

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By Jeff Dunsavage, Head of Research Publications and Insights, Triple-I

If oil prices continue to rise due to hostilities in the Middle East, fewer drivers on the road could lead to fewer accidents and insurance claims. However, increased severity – driven by rising replacement costs – would likely overwhelm any decrease in frequency over time, according to Patrick Schmid, Triple-I’s chief insurance officer.

“Even before the war, repair costs were rising more than twice as fast as general inflation,” Schmid said.  “From the supply-chain disruptions of COVID through the past year’s economic policy uncertainty with tariffs, as well as legal system abuse, upward pressure on claim costs has been unrelenting.”

Indeed, more costly gas might not affect driving as much as one might expect. According to the American Public Transportation Association, a 10 percent rise only reduces driving by 0.2 to 0.3 percent. Even if high prices continue, the average drop is just 1.1 to 1.5 percent.

“People still need to get to work and run their lives,” Schmid said. “Gas price alone isn’t enough to dramatically change that.”

Research shows wealthier drivers cut back on driving more than lower-income drivers – who tend to have fewer choices as to how they get to and from work – when gas gets expensive. Policyholders who can’t easily reduce their driving are often the ones with tighter budgets and older, less safe vehicles.

Oil prices don’t just affect how much people drive — they also flow through the entire repair supply chain. The cost of auto maintenance and repair climbed roughly 10 percent from 2023 to 2024 alone, a trend pushed higher by inflation and a shortage of skilled technicians.

What does this mean for policyholders?

The factors that influence premiums vary widely by state, and accident frequency is just one of them.  Louisiana – one of the least-affordable states – has recently seen declines in premiums as a result of both reduced frequency and severity.  

A major contributor to high premiums is the prevalence of fraud and legal system abuse in those states. States like Florida that have proactively sought to address these factors through legal system reforms, have begun to see rate declines. Since Florida’s reforms, nearly 20 new property insurers have entered the state and existing carriers have expanded their market share, driving renewed competition in the private market. This facilitated the lowest number of policies administered by Citizens Property Insurance Corp. – the state-run insurer of last resort – in over a decade.

“It’s encouraging to see other states beginning to follow Florida’s lead,” Schmid said. “It’s important for policymakers to follow successful examples.”

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Industry Financials, Market Conditions

Inland Marine Insurance: Competitive, Resilient

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By William Nibbelin, Head of Industry Data and Actuarial Research, Triple-I

The U.S. inland marine insurance industry is celebrating 20 consecutive years of underwriting profitability, with a net combined ratio of 84.2 in 2024. According to Triple-I’s latest Issues Brief, every U.S. state as well as the District of Columbia and Puerto Rico saw profitable results for this line in 2024, with the exception of New Mexico.

Combined ratio is the most common measure of insurer underwriting profitability. It is calculated by dividing the sum of the claim-related losses and expenses by premium. A ratio over 100 indicates the industry is paying out more than it is taking in.

Defining the Inland Marine Policy

Inland marine serves as a “catch-all” for all goods in transit over land. The market is split into two main categories:

  • Commercial (80 percent of the market): Covers “property on the move,” such as construction equipment, transported freight, and infrastructure such as bridges; and
  • Personal (20 percent of the market): Protects high-value niche items, including fine art and jewelry.

Pet insurance, once a subset of inland marine, is reported and tracked as its own entity as of 2024.

Predictors of Premium Changes

Macroeconomic factors – such as the cost of freight transportation, construction, and goods like glass and cattle – are major indicators of premium changes in the inland marine market. Unlike other insurance lines that can be derailed by legal system abuse or complex liability lawsuits, inland marine remains tied to the actual value of physical objects. This means growth occurs whenever the country is building, shipping, and buying durable goods.

During challenging economic cycles, the line has shown remarkable resilience. While the COVID-19 pandemic caused a brief contraction in 2020 due to travel and construction shutdowns, the industry bounced back quickly, with premiums growing by double digits in 2021 and 2022 and again by 6.7 percent in 2023 and 8.4 percent in 2024.

Assessing Frequency and Severity

Analyzing exactly how often claims occur (frequency) and how much they cost (severity) is difficult because inland marine claim count data is not included in public reporting. Additionally, because this line covers a diverse range of risks, gathering clear data can be challenging. However, public data on freight traffic, railroad collisions, equipment investments, and other measurements of goods in transit may serve as proxies to fill in the gaps.

  • Frequency: Changes in nominal GDP highly correlate with exposure. The trend suggests the line is sensitive to actual economic conditions rather than “moral hazard,” or the risk that someone might act dishonestly because they are insured.
  • Severity: Similarly, there is a high correlation of 0.76 with changes in the ratio of actual inland marine incurred losses to GDP. This finding confirms inland marine is a property-damage line rooted in the tangible economy.

A Highly Competitive Marketplace

One way the Department of Justice measures market concentration is through the Herfindahl-Hirschman Index (HHI). Between 2015 and 2024, the HHI for inland marine decreased at a compound annual rate of -4.9 percent, indicating a more open and diverse market. In 2024, every single state, including the District of Columbia and Puerto Rico, remained below the “highly concentrated” threshold.

The recent decision to report pet insurance separately has also clarified the landscape. While pet insurance itself is more concentrated, the broader inland marine market remains a robust field where many carriers compete for business.

Learn More:

Understanding Inland Marine Insurance

Affordability, Homeowners Insurance, Insurers and the Economy, Market Conditions

Bridging the Short-Term Rental Coverage Gap

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By Lewis Nibbelin, Research Writer, Triple-I

As short-term rentals grow increasingly popular, many hosts remain unaware of the added complexity and often higher costs of properly insuring them, according to Triple-I’s latest Outlook.

Though coverage needs will vary, standard homeowners’ insurance policies typically exclude losses from commercial activity, which encompasses a broader range of risks with higher corresponding premiums, the report explains. Because short-term rentals fall under commercial use, rental owners who fail to update their existing policies may face denied claims, reduced liability coverage, higher deductibles, and other serious consequences.

Operating short-term rentals in two-unit or multi-unit dwellings compounds these concerns, as uncovered incidents affect the master insurance policy shared by both the rental unit owner(s) and their neighbors. In such instances, losses can impact the policy terms, conditions, exclusions, and premiums for all residents.

Across single and multi-unit dwellings, commercial activity may violate the permit requirements and operational restrictions set by state and local laws, leading to further policy limitations and potentially cancellation or nonrenewal, the report notes. While short-term rentals most directly increase liability exposure, such policy changes may also impact coverage for physical loss or damage, content loss or damage, and loss of use.

For homeowners planning to rent out their residences, the report outlines the following steps to maintain coverage and remain adequately protected:

  • Notify their insurer: Before operating the rental, owners must contact their insurance carrier, broker, or agent, including the master policy insurance carrier if the dwelling is multi-unit.
  • Comply with policy terms: Rental owners must adhere to their existing homeowners’ policy terms, conditions, and exclusions for short-term rentals, including any restrictions on number of guests and days or nights for rental use.
  • Obtain appropriate coverage: Depending on individual circumstances, rental owners may purchase commercial property insurance, small business insurance, or short-term rental-specific coverages to protect against the commercial risks of short-term rental use. In multi-unit dwellings, all unit owners must collectively purchase new coverage.

Many insurance carriers offer short-term rental endorsements or allow rental periods on standard homeowners’ policies, though restrictions still apply. Consulting with an insurance professional to understand available coverage options is crucial to meeting the specific needs of a given rental unit.

Triple-I’s new Outlook builds on testimony from Triple-I Chief Economist and Data Scientist Dr. Michel Léonard to New York City committee members last year as they considered legislation to expand homeowners’ ability to earn income through short-term rentals. Léonard discussed the potential insurance challenges of the expansion, focusing on the pervasive protection gap among residents using their homes for commercial purposes. Neither bill successfully made it past the city council.

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Industry Financials, Market Conditions

Farmowners’ Insurance: The Trends Behind a Challenging Market

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By William Nibbelin, Senior Research Actuary, Triple-I

The U.S. farmowners’ insurance industry is navigating a difficult period, recording its third consecutive underwriting loss in 2024, with a net combined ratio of 100.7. According to Triple-I’s latest Issues Brief, this is the line’s tenth underwriting loss in the past two decades and contrasts sharply with the broader property and casualty (P/C) industry.

Combined ratio is the most common measure of insurer underwriting profitability. It is calculated by dividing the sum of the claim-related losses and expenses by premium. A ratio over 100 indicates that the industry is paying out more than it is taking in. While struggling with profitability, the farmowners’ line is seeing significant growth. Premium increases have exceeded the rest of the P/C industry for six of the past ten years.

Defining the Farmowners’ Policy

A farmowners’ policy is a specialized hybrid. Designed primarily for smaller farms, it combines the standard protections of a homeowners’ policy with specific endorsements for agricultural risks like farm structures, heavy equipment, and livestock. Larger industrial agricultural operations use more complex commercial multiline coverage.

Predictors of Premium Hikes

Because farmowners’ insurance is so tied to physical equipment and buildings, certain economic markers serve as leading indicators for where premiums are headed:

  • Machinery Repair Costs: The cost of commercial machinery maintenance has a massive 0.84 correlation with future premium changes.
  • Building Materials: The cost of materials like lumber and steel also shows a near-identical correlation of 0.85, meaning when it gets more expensive to build a barn, insurance costs inevitably follow.

The Gap Between Home and Farm

Historically, farmowners’ and homeowners’ insurance moved in tandem, but that connection is fraying. One reason for this decoupling is that national homeowners’ carriers have become much more aggressive in implementing high deductibles and strict payment schedules for roofs.

Farmowners’ policies, which are often written by smaller, regional mutual companies, have not adopted these trends as quickly. Furthermore, farmers face a unique seasonal risk during the second quarter of the year, the peak for severe convective storms. For at least 20 years, the losses for farmowners during this “storm season” have consistently surpassed those of standard homeowners.

Assessing Frequency and Severity

Analyzing exactly how often claims occur (frequency) and how much they cost (severity) is difficult because farmowners’ data is often lumped in with homeowners’ data in public reporting. However, the financial health of the farm sector may serve as a proxy to fill the gaps.

  • Frequency: A decline in a farm’s “working capital” often correlates with an increase in insurance claims, as a lack of cash can lead to the depreciation of equipment and structures.
  • Severity: The cost of individual claims is heavily influenced by inflation. There is a very high correlation of 0.94 between the cost of manufacturing farm machinery and the rising severity of insurance claims.

A Concentrated Marketplace

The farmowners’ market is considered “highly concentrated” by Department of Justice standards. Nationally, just 25 insurance carriers write 80 percent of all farmowners’ premiums.

This concentration creates “insurance deserts” in some regions. Because standard policies were built for the row crops and houses of the Midwest, they don’t always fit other landscapes. In Hawaii, for example, the reliance on leased land and permanent tree crops means that not a single carrier writes a standard farmowners’ policy. Other areas, like Arkansas and Puerto Rico, have only one insurer currently offering this specific coverage.

As we move through 2026, these trends suggest a market that is highly sensitive to both the financial health of the American farmer and the increasing volatility of spring weather patterns.

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Industry Financials, Market Conditions, Workers Compensation

Workers’ Comp:
Quiet Overachiever
in P/C Insurance

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By William Nibbelin, Senior Research Actuary, Triple-I

While personal auto and home insurance tend to be the focus of most insurance-related headlines, workers’ compensation has quietly become a model of stability and profitability. According to Triple-I’s latest Issues Brief, 2024 marked the third-best underwriting performance for the line in two decades, with a net combined ratio of 87.8.

That’s a full decade of underwriting profit for the industry. Since 2015, workers’ comp has consistently outperformed the property and casualty (P/C) insurance market. Combined ratio is the most common measure of insurer underwriting profitability. It is calculated by dividing the sum of the claim-related losses and expenses by premium. In its simplest form, a combined ratio under 100 means the insurer is making an underwriting profit; over 100 means the insurer is paying out more than it’s taking in.

The Jobs Engine and Premium Growth

Workers’ comp premiums are tied directly to the workforce. When more people work and wages rise, premiums generally follow. Only in 2020, because of the COVID-19 pandemic, employment numbers shrank in at least 15 years. Since 2020, the years 2021 through 2024 have seen the highest year-over-year increases in payroll in over two decades. However, premiums aren’t growing as fast as they are for other types of insurance, suggesting that the cost of coverage isn’t increasing though more people are working.

Safer Workplaces

Claims “frequency” — the measure of how often they happen — has been dropping steadily at an annual compound rate of -5.6 percent from 2015 to 2024, indicating work is getting safer. However, the “severity” of claims — the average cost of each claim — has been increasing.

When compared to the overall economy (GDP), however, the average cost of claims is decreasing. Therefore, the rising costs of individual claims are being driven more by general inflation in the economy than by workplace safety getting worse.

A More Competitive Market

One measure of industry competition is market concentration, which can be determined by the Herfindahl-Hirschman Index (HHI). The higher the index, the more market share is concentrated in fewer companies, implying less competition. The workers’ comp market has become much more competitive over the last 10 years. This is partly because states are moving away from government-run systems. For example, Missouri recently privatized its state fund in early 2025. Today, only 18 states have a competitive state fund. The direct combined ratio for fully privatized states has outperformed these states eight of the last 10 years. Fortunately, the direct written premium for these competitive funds as a percentage of total workers’ comp premium has dropped from 14.9 percent in 2015 to 12.9 percent in 2024.

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Auto Insurance, Business Insurance, General Liability, Homeowners Insurance, Insurers and the Economy, Market Conditions, Workers Compensation

Resilient U.S. P/C Market Performance Sets Stage for a Complex 2026

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By William Nibbelin, Senior Research Actuary, Triple-I 

The U.S. property/casualty insurance industry demonstrated notable resilience throughout 2025, navigating a landscape marked by significant regional catastrophes and shifting economic pressures, according to the latest Insurance Economics and Underwriting Projections: A Forward View report from Triple-I and Milliman.

As the industry moves into 2026, the report notes, it does so from a position of historical strength yet faces an increasingly nuanced outlook shaped by market softening and lingering macroeconomic uncertainties.

The Triple-I/Milliman report is based on data through the third quarter of 2025,

Industry-Wide Performance and Profitability

The P/C insurance industry is forecast to achieve its lowest net combined ratio (NCR) in over a decade for the full year 2025. This achievement is particularly significant, given the challenges faced early in the year, including the devastating Los Angeles wildfires in January 2025.

A key driver of this success was the first Atlantic hurricane season with no U.S. landfall in 10 years. However, while profitability reached peak levels, top-line growth began to moderate. Aggregate net premium growth across all lines for 2025 is expected to be 5.9 percent, reflecting a continued slowing of the growth rate compared to 2024.

“We’re on track to achieve the lowest net combined ratio in over a decade, thanks in part to a hurricane season that spared the U.S. and strong homeowners performance, even after the Los Angeles fires in Q1 2025,” said Patrick Schmid, Ph.D., chief insurance officer at Triple-I. “Growth in personal lines premiums remains solid, and the narrowing gap between personal and commercial lines performance points to a cautiously optimistic outlook for the industry.”

Economic Outlook: Stability Meets Vulnerability

While the broader U.S. economy and the P/C sector remain stable, economists are keeping a close watch on emerging risks. The industry’s ability to maintain its momentum in 2026 may be tested by rising political and geopolitical tensions, as well as potential shifts in the labor market.

“Overall, the P/C insurance industry and the broader U.S. economy remain stable,” said Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I. “However, despite stronger-than-expected GDP growth in the third quarter, a closer look at the data suggests the U.S. economy may be increasingly vulnerable to rising economic, political, and geopolitical uncertainty. In particular, P/C replacement costs could still see significant increases in 2026, weighing on overall P/C performance.”

Léonard further highlighted that the labor market serves as a critical indicator, noting that a rise in the unemployment rate toward 5.0% over the next six months could potentially trigger an economic contraction.

Underwriting Results by Line of Business

Personal lines continue to anchor the industry’s profitability. Personal auto remains a standout performer with a forecast 2025 NCR of 94.4, an improvement over 2024 results. However, premium growth in this sector has slowed significantly, with net written premium growth expected to land at 3.6 percent — its lowest level since 2020. Homeowners’ insurance also showed remarkable recovery. Despite the heavy losses from the Los Angeles fires in the first quarter, the line’s 2025 NCR is forecast at 99.6, placing it on par with 2024 performance.

Commercial lines continue to face ongoing challenges in liability. While most of the industry enjoys profitability, general liability and commercial auto remain the only major lines forecast to stay above a 100 NCR for 2025. General liability continues to struggle with the highest Q3 direct incurred loss ratio reported in over 15 years.

Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, detailed these persistent hurdles.

“General liability faces continued challenges,” Kurtz said. “Our 2025 net combined ratio is forecast to be similar to 2024, among the worst in over a decade. Losses are high, with Q3 direct incurred loss ratios being the highest in at least 25 years.”

He added, “While conditions may improve in 2026-2027, profitability remains a hurdle. Our general liability’s NCR expectations have risen following a challenging Q3, reflecting ongoing pressure in the segment. While some coverages are experiencing soft market conditions, aggregate premiums have been growing, but not enough to keep pace with loss trends.  We anticipate additional premium growth will be needed to improve general liability profitability.”

Workers’ compensation remains the strongest performing major line, with NCRs forecast to stay in the high 80s to low 90s through 2027. This sustained success is attributed to disciplined risk management and favorable prior accident year development.

“NCCI’s latest loss ratio trends continue to show declines,” said Donna Glenn, NCCI chief actuary. “In the current environment, modest year-to-year decreases are still expected.” Glenn noted that “while there have been a few rate increases filed in NCCI states, every state has its own story, and based on the latest data, NCCI does not anticipate any imminent reversal of current trends.”

Industry Financials, Insurers and the Economy, Market Conditions, Technology

PWC: A.I. Megadeals Spur Insurance M&A Growth

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By Lewis Nibbelin, Research Writer, Triple-I

Deals exceeding $1 billion drove insurance industry mergers and acquisitions (M&A) in 2025, aligning with a surge of artificial intelligence-based megadeals in the broader M&A market, according to PwC’s U.S. Deals 2026 Outlook. While total M&A deal value rose to $1.6 trillion through November 30 – the second-highest value ever recorded – the insurance sector remained consistent, though ongoing economic uncertainty could challenge this stability.

Upward trends emerge

Owing 93 percent of its value to megadeals, the insurance industry’s deal volume totaled $31.8 billion during the second half of 2025, compared to $30 billion during the previous six months. Heading into 2026, PwC projects that both improved loss ratios and rising pressure on property and casualty rates will facilitate further deals, as the industry’s performance can attract investors while also leading carriers to seek growth through more acquisitions.

“In coming months, expect interest rate developments and an industry-wide search for growth to strongly influence insurance deals activity,” said Mark Friedman, PwC U.S. insurance deals leader.

Conversely, total M&A market value increased by 45 percent from 2024, with more than 20 percent of its 74 deals valued at $5 billion or more relating to A.I. Such market activity suggests “A.I. is significantly accelerating software and consumer goods development” by boosting portfolio strategies, operational efficiencies, and other gains across various industries, the report notes.

Ramzi Ramsey, a senior managing director at Blackstone Growth, emphasized the increasing role of A.I. as a core driver of M&A growth, arguing that “companies who are viewed to benefit from AI tailwinds are seeing outsized multiples and deal activities,” whereas “companies where AI is viewed to be a detractor, or if the AI impact is cloudy, may have no bid.”

Middle-market lags

Though still the third-largest in the past decade, overall M&A market volume rose by only 2 percent from 2024, with middle-market deals between $100 million to $1 billion slumping to their lowest volume since at least 2013. Tariff policy shifts largely fueled these figures, reflecting greater caution among dealmakers – particularly smaller businesses – as supply-chain risks became more unpredictable.

While sudden policy changes and recent trade disputes could persist into the new year, PwC’s report found that “interest rate cuts this year have already helped mid-tier corporates, and further Federal Reserve Board action in 2026 could go a long way in relieving pressure on them,” especially as current tariff policies continue to stabilize.

In combination with declining interest rates, “products that can withstand declining consumer performance and confidence” should help the insurance sector remain active in 2026, the report adds, pointing to A.I. investments as essential to maintaining “solid ground” in the M&A market.

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Affordability, Homeowners Insurance, Insurers and the Economy, Market Conditions

Triple-I Chief Economist Testifies on NYC Measure On Short-Term Rentals

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By Loretta Worters, Vice President – Media Relations, Triple-I

Triple-I Chief Economist and Data Scientist Dr. Michel Léonard provided insurance insight to the New York City Council’s Committee on Housing and Buildings as they consider Local Bills 948-A and 1107-A. The measures aim to address New York City’s housing-affordability challenges by expanding homeowners’ ability to earn income through short-term rentals.

Léonard’s testimony focused on helping policymakers understand the protection gaps that can arise when residential dwellings are used for commercial purposes. He began by emphasizing Triple-I’s role as a nonprofit research and education organization, not a lobbying entity.

Many homeowners, Léonard noted, are unaware that standard homeowners’ policies generally exclude commercial activity, meaning hosts who fail to update their coverage may face denied claims, inadequate liability protection, or higher out-of-pocket costs if a loss occurs. Because short-term rentals fall under commercial use, homeowners who rent out their homes — whether occasionally or regularly — may inadvertently operate without appropriate coverage.

Operating a short-term rental typically requires:

  • Notifying their insurer,
  • Adhering to policy terms, and
  • Obtaining short-term rental-specific or commercial coverage.

Committee Chair Pierina Ana Sanchez asked what the cost impact might be for homeowners who must shift to a commercial policy. Léonard explained that, while costs vary, the more pressing issue is that many homeowners are unaware they have gaps in coverage.

This means homeowners, renters, and residents could all face significant financial or liability risks if an incident occurs. These risks are especially complex in multi-unit buildings, where short-term rental activity can affect both an individual unit’s policy and the building’s master policy—potentially increasing premiums and liability exposure for all residents. The result can be large uncovered losses, disputes, or claims that ripple throughout buildings and neighborhoods.

Homeowners insurance in New York City is significantly different from New York State. In written testimony to the New York Senate Committees on Investigations and Government Operations, Insurance, and Housing, Construction, and Community Development on Tuesday, November 18, Triple-I Chief Insurance Officer Patrick Schmid cited data from the Insurance Research Council (IRC), saying New York ranks 29th in its homeowners’ affordability study, with a 2.11 percent ratio of homeowners’ insurance expenditure to median household income. This is a lower percentage than a decade earlier for the state. According to IRC, New York’s homeowners’ insurance expenditures equal 0.39 percent of median.

Insurance in New York City is complicated, influenced by high property values, dense construction, and a challenging legal and claims environment. Rising labor and construction costs also contribute to higher premiums and more severe claims.

Coverage gaps and denied claims, even when policies are applied correctly, can lead to public misunderstandings about insurance. As Allstate CEO Tom Wilson recently noted, trust between consumers and companies is at a “tipping point” and must be reinforced through reliability and clear communication.

With its independent insight, Triple-I gave policymakers a clear understanding of the potential insurance consequences of expanding short-term rentals in residential buildings, helping them make informed decisions that balance affordability, consumer protection, and risk management.

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Affordability, Insurers and the Economy, Market Conditions

Triple-I Testifies on
New York Insurance Affordability

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By Jeff Dunsavage, Senior Research Analyst, Triple-I

New Yorkers – like residents of all U.S. states – have been struggling with rising costs in recent years, including the cost of home and auto insurance coverage. This week, Patrick Schmid, Triple-I’s chief insurance officer, testified to New York lawmakers about why homeowners’ insurance premiums are rising and where New York policyholders stand relative to other states.

“New York’s homeowners’ insurance market is, in fact, functioning well and remains affordable when properly contextualized,” Schmid said in written testimony to the New York Senate Committees on Investigations and Government Operations, Insurance, and Housing, Construction, and Community Development. “While premiums may appear high in absolute dollars, they are relatively average and reasonable as a percentage of household income.”

Citing data from the Insurance Research Council (IRC), Schmid said New York ranks 29th in its homeowners’ affordability study, with a 2.11 percent ratio of homeowners’ insurance expenditure to median household income ratio. This is a lower percentage than a decade earlier for the state. According to IRC – like Triple-I, an affiliate of The Institutes – New York’s homeowners’ insurance expenditures equal 0.39 percent of median home value.

“When a home costs $413,588 and insurance costs $1,602 annually (0.39% of the home’s value), the insurance premium is not necessarily the driver of unaffordability within the region,” Schmid said. “The underlying property cost, and associated replacement costs, are likely a key challenge.”

He compared New York with:

  • Louisiana, with a ratio of 1.18 percent (more than three times New York’s)
  • Mississippi, at 1.04 percent (nearly three times New York)
  • Alabama, at 0.78 percent (twice New York)
  • Florida, at 0.4 percent (1.7 times New York)

“Only 20 states have more efficient insurance costs relative to home values,” Schmid said. “This contradicts the narrative of an affordability crisis in New York’s homeowners insurance market. Our market is delivering coverage at rates that are among the most competitive in the nation when measured against the value of assets being protected.”

New Yorkers face significant cost burdens that are structural and related to a variety of factors outside of insurance, Schmid said.

The fundamental driver of insurance costs is the cost to rebuild homes, most notably:

  • Labor costs: Skilled trades in NY metro areas command premium wages;
  • Material costs: Transportation, storage, and compliance add to expenses;
  • Building codes: Stricter standards increase rebuilding costs but improve long-term resilience and reduce future losses; and
  • Land values: Property values include expensive land that doesn’t require insurance, making the actual structure component even more valuable proportionally.

Schmid cautioned against lawmakers following the temptation to intervene in insurance markets – as some states have attempted to do in recent years — emphasizing that “targeting insurance premiums would address a symptom rather than the cause, potentially destabilizing a well-functioning, competitive market without improving overall housing affordability for New York residents.”

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Homeowners Insurance, Industry Financials, Insurers and the Economy, Market Conditions

IRC: Homeowners’ Insurance Rate Filing Growing Less Efficient

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By William Nibbelin, Senior Research Actuary, Triple-I

The rate-filing process for homeowners’ insurance has become less efficient and effective, a new study by the Insurance Research Council (IRC) shows.

The report – Rate Regulation in Homeowners Insurance: A Comparison of State Systems – analyzed industry data from 2010 through 2024 across all states, including the District of Columbia. The study found that, not only is it taking longer for insurers to get rate increases approved, but the increases are lower than requested, with bigger gaps between the request and the granted amount than had previously been the case.

Key findings:

  • The number of rate filings is growing at a compound annual growth rate of 3.3 percent from 2018 to 2024 nationwide.
  • The average number of days to approval grew from 44 to 63 days.
  • The number of filings withdrawn increased from 2.9 percent of filings to 3.9 percent of filings.
  • The percentage of filings receiving less rate impact than requested grew by more than 10 points.
  • The disparity in approved rate impact grew by nearly 1 point.
  • Market concentration (as measured by the Herfindahl-Hirschman Index, or HHI) decreased by 14.6 percent.
  • The residual share of direct written premium has grown at a compound annual growth rate of 10.5 percent from 2020 to 2024
  • A strong-to-moderate correlation exists between net underwriting losses and premium shortfalls within states and across time.
  • Filing process measures and market outcomes vary by regulatory systems.

During this same period from 2010 through 2024, the homeowners’ insurance industry experienced a net combined ratio over 100 in 10 of the 15 years. Combined ratio – calculated as losses and expenses divided by earned premium plus operating expenses divided by written premium – is a key measure of underwriting profitability. A combined ratio over 100 represents an underwriting loss.

The IRC report includes the determination of a strong correlation between underwriting loss and premium shortfalls, defined as the potential dollar difference between the effective filed rate impact and approved rate impact.

In California, for example, the time to approval exceeds that of the next highest state – New York – by more than four months. California also has the second-fastest-growing residual market share from 2.1 percent in 2019 to 8.2 percent in 2024 and the second-fastest-growing excess and surplus homeowners market share from 0.3 percent in 2010 to 6.3 percent in 2024. This means that, at most, only 85 percent of California homeowners’ insurance is covered by a standard policy.

IRC, like Triple-I, is an affiliate of The Institutes.