U.S. Homeowners Insurance Market Shows Signs of Improvement
For the first time in five years, the U.S. homeowners insurance market has posted a combined ratio of less than 100, according to a new report from S&P Global Market Intelligence (S&P GMI). This improvement comes as direct written premiums in the U.S. homeowners insurance market rose 13.4% in 2024 to nearly $173.1 billion, while the net combined ratio fell to 99.3, an 11.2-point improvement from 110.5 in 2023.
The net loss ratio also improved significantly, dropping to 65.2%, the lowest since 2019, representing a 10.3-percentage-point year-over-year improvement from 75.5%. According to the S&P GMI report, higher prices were a major factor in the industry-wide loss and combined ratio improvements, although not all homeowners insurers increased premiums last year.
“Insurers’ aggressive pursuit of homeowners rate increases fueled the rise in premiums,” the report noted. The national average rise in owner-occupied homeowner rates in 2024 was 11%, up from 9.7% in 2023, as per Market Intelligence’s RateWatch application.
A ranking of the top 20 homeowners insurers based on direct written premium volume showed that the three largest players – State Farm, Allstate, and USAA – each grew by double digits and reported improved combined ratios. However, despite a 16.4% jump in direct premiums to $31.5 billion, State Farm’s net combined ratio remained above 100, ending at 105.4.
The report also highlighted that insurers’ direct loss and loss-adjusted expense ratios rose above 90% in several states due to severe convective storms in the second and third quarters of 2024 and Hurricane Helene in the third quarter. Nebraska was particularly affected, with the highest direct loss/LAE ratio at 136.6% due to tornadoes and hail storms in June.
Among the top 10 insurers analyzed, four had combined ratios above 100: Auto Owners Exchange (117.07), Nationwide (105.8), State Farm (105.4), and American Family (103.8). Notably, Nationwide Mutual Insurance Co., which recorded an 8.6% drop in premiums to just over $4 billion, still managed a 17.9-point improvement in its combined ratio, though it remained above breakeven at 105.8 in 2024.
On the other hand, the four lowest combined ratios were recorded by Chubb (81.1), Farmers (85.4), Allstate (89.5), and Liberty Mutual (93.1). These figures indicate a mixed performance across the industry, with some insurers achieving significant improvements while others continue to face challenges.
The improvement in the homeowners insurance market is a positive sign for homeowners, particularly in states like Texas where insurance rates have seen significant increases. As the industry continues to recover from recent natural disasters, the trend towards better combined ratios is expected to continue, potentially leading to more stable premiums in the future.
