S&P Global Analysis: US homeowners insurance rates jump by double digits in 2023

The nationwide calculated weighted average premium rate increase for owner-occupied homeowners insurance was 11.3% through Dec. 29, 2023, according to S&P Global Market Intelligence’s RateWatch application.

Key highlights from the analysis include:

• In total, 25 states saw an effective rate change of at least 10% in 2023, compared to only six states during the prior year. The three states with the highest effective rate changes in 2023 were Texas (23.3%), Arizona (21.8%) and Utah (20.3%).

• The states with the lowest weighted average effective changes were Hawaii (1.8%), Vermont (3.3%), Delaware (3.9%) and Mississippi (3.9%).

• Consecutive higher-than-average increases in homeowners insurance rates have pushed the countrywide cumulative increase since 2022 close to 20%.

• Between 2018 and 2021, the countrywide yearly average rate change ranged from 2.5% to 3.8% but this jumped to 6.2% in 2022 and 11.3% in 2023. Five states saw double-digit effective rate increases in 2022 and 2023, namely Texas, Arizona, Oregon, Oklahoma and Colorado.

• The combined entities that make up Farmers Insurance Group of Cos. had a nationwide calculated weighted average rate increase of 19.4% for its owner-occupied homeowners coverage in 2023, the highest among the country’s largest writers of the business.

• Chubb Ltd.’s effective rate increase of 6.9% in 2023 was the lowest calculated change among group.

US homeowners insurers’ poor underwriting results have contributed to the industry’s push to raise its rates by double digits in 2023.
The nationwide calculated weighted average premium rate increase for owner-occupied homeowners insurance was 11.3% through Dec. 29, 2023, according to S&P Global Market Intelligence’s RateWatch application. In total, 25 states saw an effective rate change of at least 10% in 2023, compared to only six states during the prior year. The three states with the highest effective rate changes in 2023 were Texas (23.3%), Arizona (21.8%) and Utah (20.3%)
The states with the lowest weighted average effective changes were Hawaii (1.8%), Vermont (3.3%), Delaware (3.9%) and Mississippi (3.9%).
California’s rate approval process came under review in 2023 as several of the largest homeowners insurers in the state stopped issuing new business during the year. The Hartford Financial Services Group Inc. is the most recent company to announce that it will no longer offer new homeowners’ insurance in the state, saying the decision was made based on current trends in the market and the unique challenges insurers are facing in California.
Many insurers keep their rate requests under 7%, as a provision in the state’s Proposition 103 statute could trigger a public hearing if the request was higher than 6.9%. However, rising claim severity trends pushed many companies to seek rate increases that were substantially higher than the 6.9% threshold. The Golden State’s largest homeowner insurers’ recorded a calculated weighted average rate increase of 10.0% in 2023.

Farmers, Liberty Mutual lead the pack

The combined entities that make up Farmers Insurance Group of Cos. had a nationwide calculated weighted average rate increase of 19.4% for its owner-occupied homeowners coverage in 2023, the highest among the country’s largest writers of the business.
The insurer had a double-digit effective rate increase in 34 states, with the highest jump being in Illinois. The multiple rate hikes approved in Illinois pushed Farmers Insurance Group’s calculated effective rate increase in the state to 42.2%.
Units of Liberty Mutual Holding Co. Inc. had the second-highest calculated weighted average rate increase of 17.2% in 2023. The insurer boosted rates in 47 states, with effective rate changes in Oregon, Louisiana, Idaho and Utah exceeding 30.0%.
State Farm Mutual Automobile Insurance Co.’s calculated weighted average rate increase of 7.8% made it only one of two of the country’s largest homeowners insurers with an effective rate change below 10% in 2023. The nation’s largest homeowner insurer had double-digit effective rate increases in eight states. Its 23.0% rate increase in Arkansas was its largest during the year, going into effect Nov. 15, 2023, for renewal business and will impact about 168,000 policyholders.
Chubb Ltd.’s effective rate increase of 6.9% in 2023 was the lowest calculated change among the group.

Consecutive years with above-average rate hikes

Consecutive higher-than-average increases in homeowners insurance rates have pushed the countrywide cumulative increase since 2022 close to 20%. Between 2018 and 2021, the countrywide yearly average rate change ranged from 2.5% to 3.8%, but this jumped to 6.2% in 2022 and 11.3% in 2023. Five states — Texas, Arizona, Oregon, Oklahoma and Colorado — saw double-digit effective rate increases in 2022 and 2023.