If you own a home, you may be unpleasantly surprised to see your insurance bill growing like a beanstalk. Homeowners nationwide saw a 20% increase from 2021 to 2023, and another 6% is predicted for 2024. Here in California, my bill rose 19% this year alone! What’s going on?
The most expensive homes to insure are those where hurricanes and tornadoes hit regularly, but California’s fire disasters have also wrecked insurers’ balance sheets. Over the last few years, there has been an escalation of disaster frequency and intensity, and homeowners are being made to pay for this. Some insurers are even dropping out of the market, leaving some homeowners with no options other than a plan of last resort from the state.
Fewer catastrophes would keep insurers from paying out billions, and that would certainly put a lid on premium hikes. One of the largest insurers, Allstate, lost 18 cents for every $1 in premiums last spring, but trends have improved and they’re now profitable thanks to higher premiums and fewer catastrophic events. Home insurers Chubb and Travelers are now pretty healthy.
Another ray of hope for less premium pain is the notion that reinsurance pressures are waning. Reinsurance companies are global companies that take much of the risk off the hands of the companies who insure your home. These reinsurers have chosen to reinsure less and have dramatically raised the rates insurers pay. Both of these factors have resulted in higher rates for homeowners, but that appears to be subsiding.
We’re coming off of record natural disasters, and hopefully, subsiding events will keep our insurance premiums from rising much further. If you have questions about your insurance needs, coverage, or premiums (what you pay) feel free to contact your Elevation Wealth Partners Advisor.
The information provided in this article is for general informational purposes only and does not constitute legal, tax, insurance, or financial advice.
