Homeowners insurance rates have been on the rise, especially in states like Texas. However, a recent report brings some good news for homeowners. For the first time in five years, the U.S. homeowners insurance market has reported a combined ratio of less than 100. This means that the industry is starting to improve financially.
In 2024, direct written premiums in the homeowners insurance market increased by 13.4%, reaching nearly $173.1 billion. The net combined ratio, which measures profitability, dropped to 99.3, a significant improvement from 110.5 in 2023. This change indicates that insurers are managing their costs better.
The net loss ratio also saw a positive shift, falling to 65.2%, the lowest it has been since 2019. This is a 10.3 percentage point improvement from 75.5% the previous year. While higher prices contributed to these improvements, not all insurers raised their premiums last year, according to S&P Global Market Intelligence.
The report highlights that many insurers aggressively increased rates to keep up with rising costs. The average rate for owner-occupied homes rose to 11% in 2024, up from 9.7% in 2023. Among the largest homeowners insurers, State Farm, Allstate, and USAA all reported double-digit growth in premiums and better combined ratios. However, State Farm’s net combined ratio remained above 100, ending at 105.4.
The report also pointed out that some states faced challenges. Severe storms and Hurricane Helene in 2024 led to high loss ratios in several areas. Nebraska experienced the highest direct loss ratio at 136.6%, largely due to tornadoes and hail from storms last June.
Four of the top ten insurers had combined ratios over 100, with Auto Owners Exchange at 117.07 and Nationwide at 105.8. Interestingly, Nationwide was the only major insurer to report a drop in premiums, down 8.6% to just over $4 billion, yet it still improved its combined ratio to 105.8.
On the other hand, Chubb, Farmers, Allstate, and Liberty Mutual reported the lowest combined ratios, indicating stronger financial health. This overall trend suggests that while homeowners insurance rates are rising, the industry is beginning to stabilize and improve its performance.