Rising Costs and Reduced Availability of Homeowners Insurance
A recent dataset released by the U.S. Treasury’s Federal Insurance Office provides ZIP code-level data from 2018 to 2022, revealing that homeowners insurance is becoming more costly and harder to procure for millions of Americans. The data covers over 330 private insurers and approximately 50 million homeowner insurance policies annually. This comprehensive dataset was compiled through a collaborative effort between the National Association of Insurance Commissioners, state insurance regulators, and the Federal Insurance Office.
Key Findings from the Data
- Increasing Insurance Costs: Homeowners insurance premiums are rising rapidly across the nation, with significant regional and ZIP code variations.
- Climate-Related Risks: Communities affected by substantial weather events are experiencing much higher insurance costs compared to other areas.
- Disparities in Premiums: Consumers in the 20% of ZIP codes with the highest expected annual losses from climate-related perils paid an average of $2,321 in premiums, 82% more than those in the 20% of ZIP codes with the lowest climate risk.
- Nonrenewal Rates: Homeowners in high-risk areas face higher policy nonrenewal rates from private insurers, with average nonrenewal rates about 80% higher than in low-risk areas.
- Claim Payments: The paid loss ratio was highest in the highest risk ZIP codes, with an average claim payment of $24,000 compared to $19,000 in the lowest risk areas.
Interactive Data Exploration
An interactive map developed from the Treasury’s data allows users to explore various indicators by ZIP code, including the fraction of policies not renewed, claim frequency, average claim payments, and average premiums for each year from 2018 to 2022. It’s important to note that the data provides averages, and individual experiences may vary.
Regional Variations and Trends
The data highlights significant regional disparities in insurance costs and availability. For instance:
- ZIP codes with the highest premiums in 2022 were primarily located in Florida, with Palm Beach topping the list at $40,719.
- Areas with the largest premium increases from 2018 to 2022 were mainly in California and Nevada, with Laytonville, CA experiencing a 105.69% increase.
- The highest nonrenewal rates in 2022 were observed in South Carolina, particularly in Hilton Head Island at 43.85%.
These trends underscore the growing challenges posed by climate-related events to both insurers and homeowners, particularly in high-risk regions. The data provides valuable insights for current and prospective homeowners to compare insurance costs, claim frequencies, and nonrenewal rates in their neighborhoods relative to surrounding areas and the national average.
