US home insurance rates fall for the first time since 2017

U.S. property insurance rates are falling for the first time in nearly seven years as insurers returned to profitability amid lower catastrophe losses.

The average U.S. property insurance rate fell 0.94 percent in the second quarter from a year earlier, after several periods of subdued increases over the past year, according to a housing market report from Aon Plc. It’s the first time rates have fallen since the third quarter of 2017.

“We, along with our clients, are excited that rates are finally coming down,” Vincent Flood, Aon’s U.S. real estate leader, said in an interview. “Customers definitely had rate fatigue.”

In recent years, more frequent losses have hurt the profitability of US insurers, leading to a 30% rise in rates in the third quarter of 2020. Then, rising interest rates put even more pressure on the sector as investors left the reinsurance market in search of alternatives. investment, Flood said.

Last year, lower catastrophe losses meant insurers returned to profitability, allowing them to allocate more capital to their property insurance businesses, boost growth ambitions and adopt aggressive pricing strategies.

Rate moderation is expected to continue in the current quarter and could persist if catastrophe losses remain low in the final months of the year, according to Flood.

“If we were to have a significant event, then I would see the market stabilize again,” he said. “But absent that, I think we’ll continue to see rates go down in 2025.”

Top photo: Homes are in the Toll Brothers Inc. community. Bowes Creek Country Club in this aerial photo taken over Elgin, Illinois, USA, Wednesday, September 26, 2018. Photographer: Daniel Acker/Bloomberg.

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