The hard property-casualty insurance market continues to grind on much longer than insurance agents and their clients would like. There are some initial signs that conditions may improve, but they remain difficult in the country’s four largest states.
P&C insurers’ reported results have improved over 2023 levels. The sector reported an underwriting profit in the first half of 2024, according to Verisk, with the combined ratio falling from 104.2 to 97.6. This was the first profitable first half of the year since 2021.
Rising personal lines premiums have accounted for much of the turnaround. A.M. Best reported that private passenger auto premiums increased 12.7% in the first half of 2023 and another 15.6% in the first half of 2024. Auto premiums are up 33% since the first half of 2020. Meanwhile, homeowners premiums jumped 14.8% in the first half of 2023 and 13.5% in the 2024 first half.
Prominent individual insurers have similarly posted improved results. Progressive’s first half profit more than quadrupled to $3.79 billion. Allstate swung from a $1.74 billion loss to a $1.49 billion profit. Liberty Mutual similarly reversed a $650 million loss into a $2.26 billion profit. Travelers reported a 72% profit increase.
Those positive results have not yet softened market conditions in the country’s four most populous states, however.
California. Homeowners policyholder count in the state’s FAIR plan has increased 137% in the last five years, including 14% just in the last year. Eight insurers have either reduced their underwriting appetites or ceased writing new policies entirely. Allstate recently sought a 34% rate increase. All this while another active wildfire season is ongoing.
Gov. Gavin Newsom last spring proposed legislation that would cut the timeline for the state insurance department to review insurer rate filings from up to 180 days to 120. At the end of the maximum 120-day period, insurers will be able to use estimated rates provided by the department in response to filings. This follows his orders to the department last fall to take action to repair the market.
Texas. A recent study found that Texans pay an average of 2% of home value for insurance compared to 0.5% on average for the rest of the country.The number of insurers seeking double-digit rate homeowners rate increases has exploded by 560% in the last 10 years. The insurance department received more than 150 such requests in 2023 and another 74 through the end of July 2024. One insurer requested a 73% increase.
The involuntary market is also feeling the effects of severe storms. The Texas Windstorm Insurance Association’s underwriting and actuarial committee recently voted to request a 10% rate increase for 2025.
Four insurers have announced that they are leaving the state this year. Progressive, the most recent, said that 40% of its recent countrywide storm losses were in Texas.
Florida. The Sunshine State’s long-troubled homeowners market has seen some bright spots recently. The state’s Office of Insurance Regulation reported that the industry made a $160 million underwriting profit in the first quarter of 2024. Nine new insurers have entered the market. The state-run Citizens Property Insurance is implementing a depopulation program that has shifted more than 400,000 policies to the voluntary market. The average rate increase filing this year has been below 2%, with many insurers seeking no increase or rate reductions.
However, success in Florida is largely dependent on hurricane activity. Hurricane Helene is expected to result in at least $5 billion in insured losses, not including flood insurance, with at least $435 million of that in Florida. Two months remain in the 2024 hurricane season, leaving a lot of time for additional storms. These events could stall the market’s recovery.
New York. The homeowners market in the Empire State has been buffeted by the insolvency of a Florida-based company that insured thousands of homes on Long Island and the near-insolvency of a regional insurer based near Buffalo. In addition, both Kemper and MSA have announced exits from personal lines markets countrywide. Remaining insurers have implemented strict underwriting standards and are using technologies such as aerial photography to uncover perceived problems with roofs.
In addition, combined ratios for both personal and commercial auto have been persistently greater than 100% and have recently been above 110%. The news coming out of the largest states is mostly gloomy. However, if recent reports of profitability become a trend, 2025 may well be a brighter year for insurance buyers and the agents who serve them.
