Home Owners, Auto Insurance, and Related Stuff

[C-Man 27184]

On 6/20/2024 at 10:57 AM, MonkeyDoughnut said:

Homeowners is like life insurance, you're going to pay more as it gets older

 

On 6/20/2024 at 7:40 PM, ROFL BOX said:

Like @MonkeyDoughnut said...

The adage of "They don't make 'em like they used to" is correct.  Modern building codes & products are vastly superior to 40... 50 + years ago.

 

Electrical code, AC efficiency, water systems... all are better in a modern structure.

Plus, there's the "They obviosly aren't smart enough to NOT live in okie" penalty @ work here.

Yep. Also, you and somebody else could get a quote for the exact same property and get a different premium. In addition to the structure itself, the carriers take into account your credit, past claims history, payment history (if you're a chronic late payer, you will get a higher quote), etc.

[SydneyCarton 48054]

On 6/20/2024 at 10:14 AM, Sandman said:

My homeowner's insurance went up another $500. My house is around 50 years old and I'm paying $3700 a year. My coworker (we live in OK and are in different counties) told me he pays under $2000 for his nearly new house, so I got an online quote from his place. $3550 for them. He said his girlfriend has a bigger, newer house and pays $2100 with Progressive. I got their quote and it was $3111. I got an online quote from Amica, $6700!!!!

What the actual fuck?? 

I had @C-Man look at my stuff, and I really appreciate it, by the way. He said most people wouldn't even insure my home (50+ years old) just becuase of the part of town I live in...granted we just got tore the fuck up from the derecho, but my home has also never flooded during Harvey, Allison, and of the major flood events of the last 5 years, and I've never filed a claim. Location Location Location, apparently. 

[Jiggy-Z 3432]

Well, as of midnight my homeowners insurance expired. We set up a new policy a couple of years ago through Progressive who has some sort of deal with Farmers (I think. My wife, who I may or may not getting divorced from was in charge of this)

At any rate, we have a unique home in the "country" which while pretty low risk and fairly new 2007, really needs a good look at to insure. In fact, during the initial underwriting, I had to go dig up construction documents on our garden roof install, for example.

We have been trying for two years to get an actual inspection, but have not been able to get Farmers out there simply because they cant just drop by since our propert is gated and game fenced and they refuse to set up an actual appointment.

So I guess they labeled us a non  cooperative and dropped us despite our protestations and recommended we get another carrier for everything.

I own a construction business and my agent hasn't been able to help much on the personal side over the years.

Im eligible for USAA. Any other suggestions? Thanks.

[blacklab 11926]

I have USAA and although it's gone up 50% the last two years it's still way way cheaper than anything else I've found. They are also the easiest to deal with insurance company I've ever had.

[PilotsError 2286]

I wonder if we're going to see millions (who currently pay for insurance) just stop paying.  Some sort of national movement/crises over the next few years. Something has to come to a head.

[UTGrad98 2271]

35 minutes ago, PilotsError said:

I wonder if we're going to see millions (who currently pay for insurance) just stop paying.  Some sort of national movement/crises over the next few years. Something has to come to a head.

I thought about that but I think Im just going to keep raising my wind/hail % deductible instead. I just want to pay a grand or so a year for the off chance the house completely burns down from some electrical BS or there is a direct hit of an F4 or F5 tornado. If my roof gets fucked someday from hail I may have to eat that and most likely hire someone to patch up the parts that need it instead of always trying to get a total roof repair paid for by insurance. As a home owner for the past 20 years, I have never filed a claim. But I have paid about 25 grand to insurance over that time. Moving forward its going to be ridiculous paying for the coverage Ive had in the past, even as recently as 2 years ago...

[bschoolprof 6251]

I think the price increases we have seen the past year or two will start abating soon.  Most big P&C insurers lost money in 22-23 as premiums were not set high enough to cover claims (the labor and materials inflation from covid took years to fully work through the insurance system).  That has changed now, with many P&Cs reporting quite healthy profits in 24.  Allstate's EPS experience over time is typical.  Eventually, price competition will eat away at this, as insurance customers are extremely price sensitive.  

But in the long run, I think you'll see more people carry liability only on their cars or set higher deductibles on their comp/collision (if their lender allows).  Same thing for homeowners, as @UTGrad98 says above.  The days of insurance companies buying Texans a new roof every 15 years are probably over (and should be).  

The real culprit is that it is fucking expensive to repair homes and cars now.  The insurers are largely just the messenger on that.  

[Sbbruin 21829]

This was the worst year I've ever had dealing with homeowners.  My carrier, Safeco, wouldn't renew because they placed my entire zip code as a high fire risk, when it would need to literally burned like 12 city blocks of homes for a wildfire to reach us.  And I went round and round with others.  Ultimately had to go with a split policy- the California "Fair Plan" which mostly covers just fire, and then a supplemental policy with a company called Bamboo for everything else.  Quadrupled my rate.  It was a royal pain in the ass.

[T’Boo Ted Marshall 2731]

2 hours ago, PilotsError said:

I wonder if we're going to see millions (who currently pay for insurance) just stop paying.  Some sort of national movement/crises over the next few years. Something has to come to a head.

Only possible for those without a mortgage.  Otherwise, they will force place insurance and charge you for it at a not nice rate.  

[msbesq 385]

Just changed from Travelers to Farmers. Cars are about the same but house is $3900 per year cheaper--East College Station(Katy).

[Nice Guy Eddie 13508]

Home owner for 20 years and never made a home claim so I'm clueless to that side of the equation.

I've heard people comment that, after minor roof damage due to reported hail, they're able to get a brand new roof for free from their insurance. Can that occur? Because if so, that makes me wonder if the insurance company are good stewards of the premiums they receive. I would want my insurance company to tell a homeowner with a 20+ years old roof to pound sand if they get minor roof damage.

[hornmpa96 2618]

7 hours ago, Jiggy-Z said:

Well, as of midnight my homeowners insurance expired. We set up a new policy a couple of years ago through Progressive who has some sort of deal with Farmers (I think. My wife, who I may or may not getting divorced from was in charge of this)

At any rate, we have a unique home in the "country" which while pretty low risk and fairly new 2007, really needs a good look at to insure. In fact, during the initial underwriting, I had to go dig up construction documents on our garden roof install, for example.

We have been trying for two years to get an actual inspection, but have not been able to get Farmers out there simply because they cant just drop by since our propert is gated and game fenced and they refuse to set up an actual appointment.

So I guess they labeled us a non  cooperative and dropped us despite our protestations and recommended we get another carrier for everything.

I own a construction business and my agent hasn't been able to help much on the personal side over the years.

Im eligible for USAA. Any other suggestions? Thanks.

Have you tried Texas Farm Bureau?

I have insured the home in my ranch through them. The agent and his office has always been helpful and responsive. They also were not a hassle to do with after a fairly significant hail storm hit my property a couple of years ago.

[Jiggy-Z 3432]

7 minutes ago, hornmpa96 said:

Have you tried Texas Farm Bureau?

I have insured the home in my ranch through them. The agent and his office has always been helpful and responsive. They also were not a hassle to do with after a fairly significant hail storm hit my property a couple of years ago.

I have not tried Texas Farm Bureau. Did not cross my mind.  We are not on a ranch per se, just 6 acres in southwest Austin.  The game fence was to keep the roaming pit bulls from our neighbor's dog fighting concern from mauling my family- years ago.

Those guys are gone, but the fence remains.

Wife does not want USAA for some reason. Anyone heard anything bad about them.

[blacklab 11926]

I've never had a single issue with them. The 2 times I've made a claim I had a number in my head of what I thought I should get and both times they made an offer that exceeded that by several thousand, unlike geico and state farm that I had to fight tooth and nail to get them to pay what was owed.

My sister, my uncle, my sister's in-laws are all on it and have never had an issue. Both my uncle and my sister's father-in-law have told me stories about being in a wreck that wasn't their fault, getting the run around from the other persons insurance company, then telling the other insurance company they were going to let their insurance company deal with this, then telling them it's USAA and getting a check the next day. Apparently they have a reputation for being dicks to other insurance companies.

[partytimesausage 27]

I'm heavily leaning on the idea to let my Home owners lapse and self insure.  Talk me out of it. 

1)  I'm very handy and capable of fixing most things. 

2)  If the house burned down, It would suck but i could take the financial hit. 

3)  Been in the house since 2017 and even with big events that cause damage the deductible is always more then the repairs so it never pays.  Just feels wasteful and irritated that the premiums have run way out of control. 

 

 

Premium is up to 7k a year up from 2000 in 2017.  Shopped it and broker could not get a better price. 

[ROFL BOX 6647]

9 hours ago, partytimesausage said:

I'm heavily leaning on the idea to let my Home owners lapse and self insure.  Talk me out of it. 

As noted prior, if you have a mortgage then this is not possible. 

You did not comment on that potential.

[ROFL BOX 6647]

10 hours ago, Jiggy-Z said:

I have not tried Texas Farm Bureau. Did not cross my mind.  We are not on a ranch per se, just 6 acres in southwest Austin.  The game fence was to keep the roaming pit bulls from our neighbor's dog fighting concern from mauling my family- years ago.

Those guys are gone, but the fence remains.

Wife does not want USAA for some reason. Anyone heard anything bad about them.

Farm Bureau is a good company IMO & has approved us 2× (hail) in the past 6 years.  The last one is from +baseball sized hits, so I really had no option to pass that up.

[wild_turkey 3159]

I was told if I didn't already have my policy I could not get it again. Seems insane to me. I don't know how this ends, but it doesn't seem good.

It seems like there is an insurance bubble ready to pop. I wouldn’t be surprised if many families either can’t find coverage period or can’t afford the coverage they are offered, leaving them with no choice but to be uninsured, a situation that would’ve been unthinkable 5 years ago.

That’s a crisis waiting to happen. If enough people are forced to go that route in a high risk area, and then a major natural disaster strikes, there could be a lot of homeless families.

Perhaps the cost of insurance will become a bigger factor in the decision making of buying a home, how big of a home to buy, or what region to live in. Perhaps the cost of owning and insuring a home in certain areas like the gulf coast will skyrocket, making people less willing to live there. Sadly, maybe that’s how it has to be.

The Daily did a podcast on this topic not long ago:

https://podcasts.apple.com/us/podcast/the-daily/id1200361736?i=1000655653194

[partytimesausage 27]

8 hours ago, ROFL BOX said:

As noted prior, if you have a mortgage then this is not possible. 

You did not comment on that potential.

no mortgage so i can let the coverage lapse without penalty.

It just feels stupid to keep cutting insurance premium checks and never get a pay out with the size of deductibles now. 

Talk me out of self insuring.  what am i missing besides the risk of the home burning down?

 

[ROFL BOX 6647]

1 hour ago, partytimesausage said:

 

It just feels stupid to keep cutting insurance premium checks and never get a pay out with the size of deductibles now. 

Talk me out of self insuring.  what am i missing besides the risk of the home burning down?

 

Provided you actually DO set this money aside for a contingency, I don't see any actual argument other than catastrophic loss.

Insurance paid work we have done:

• Water heater I nn the attic blowout, customer lives in a subdivision where there is +75 feet between houses & the layout of the properties prevented any of the neighbors from noticing... no phone call to say "hey, I know you left tow  2 days ago for a 7 day tip... water is running out of the back door & I don't have a key to go inside & see what's going on."

•  ⚾️ or larger hail (golf ball type hits CAN cause long term damage & shorten the life span of your shingle roof, however it is uncommon for that to be an immediate requirement to replace... baseball hits from the April 24 storm that hit me, Johnson City, Henly, Wimberley, San Marcos... I have seen metal roofs & OSB decking that were punched in.

Again, provided you actually set those premium dollars aside for possible use (maybe invest it in a C.D.?), go for it with that assumed / understood risk.

*current costs for a shingle total re-roof for a 1 story "walkable", 30 year (generic Dimensional / Architectural) is around $ 500 to $ 550 / square & for a somewhat common 35 square house that's $ 17,500.⁰⁰ to $ 19,250.⁰⁰.

[ballrific 215]

This was the worst year I've ever had dealing with homeowners.  My carrier, Safeco, wouldn't renew because they placed my entire zip code as a high fire risk, when it would need to literally burned like 12 city blocks of homes for a wildfire to reach us.  And I went round and round with others.  Ultimately had to go with a split policy- the California "Fair Plan" which mostly covers just fire, and then a supplemental policy with a company called Bamboo for everything else.  Quadrupled my rate.  It was a royal pain in the ass.

same, sort of. Been with safeco for a while and they decided it was time to gouge on up upcoming renewal. if we didn’t have a mortgage, I absolutely would probably roll the dice like some are saying..

[Jiggy-Z 3432]

Im getting pushback from some due to value. Over 700k seems to be an issue.

Also, we have commercial standing seam roof, commercial 4 ply TPO gravel balasted roof, and commercial hydro tech garden roof over concrefe roof deck.  So we will never have a roof claim, at least for hail, but somehow this is a problem all of a sudden.

[ROFL BOX 6647]

"Commercial Standing Seam"❓️

[T’Boo Ted Marshall 2731]

@partytimesausageIf your forego HO coverage I would bump up that Umbrella Coverage for liability purposes.  

[C-Man 27184]

On 7/1/2024 at 10:19 AM, PilotsError said:

I wonder if we're going to see millions (who currently pay for insurance) just stop paying.  Some sort of national movement/crises over the next few years. Something has to come to a head.

Don't disagree that the current situation isn't sustainable but I'm not sure what happens. The truth is most carriers haven't turned an underwriting profit hardly at all in the last 15 years. 2022 (or '23) was an aberration. But the problem is we're seeing more catastrophic weather events than we've ever seen -- that doesn't appear to be letting up any time soon, whether you believe in climate change or not. Something is causing us to have more major cat events leading to staggering insurance losses. Oh, and looky there we just had the earliest Cat 5 hurricane we've ever seen in the Caribbean.

 

On 7/1/2024 at 11:52 AM, bschoolprof said:

I think the price increases we have seen the past year or two will start abating soon.  Most big P&C insurers lost money in 22-23 as premiums were not set high enough to cover claims (the labor and materials inflation from covid took years to fully work through the insurance system).  That has changed now, with many P&Cs reporting quite healthy profits in 24.  Allstate's EPS experience over time is typical.  Eventually, price competition will eat away at this, as insurance customers are extremely price sensitive.  

But in the long run, I think you'll see more people carry liability only on their cars or set higher deductibles on their comp/collision (if their lender allows).  Same thing for homeowners, as @UTGrad98 says above.  The days of insurance companies buying Texans a new roof every 15 years are probably over (and should be).  

The real culprit is that it is fucking expensive to repair homes and cars now.  The insurers are largely just the messenger on that.  

Pretty much the bolded part. I do not, however, share your belief that price increases are necessarily a thing of the past yet. As I mentioned above P&C companies have been handed their asses for the last decade plus. Chubb had a record-breaking profit in 2022 or 2023 but that has not been the norm for them recently. The reinsurance markets are the killer now as they've gotten slaughtered. Those rates are astronomical for the P&C carriers, who believe it or not buy insurance to cover their underwriting bets, and that gets passed on down the line.

 

On 7/1/2024 at 12:04 PM, Sbbruin said:

This was the worst year I've ever had dealing with homeowners.  My carrier, Safeco, wouldn't renew because they placed my entire zip code as a high fire risk, when it would need to literally burned like 12 city blocks of homes for a wildfire to reach us.  And I went round and round with others.  Ultimately had to go with a split policy- the California "Fair Plan" which mostly covers just fire, and then a supplemental policy with a company called Bamboo for everything else.  Quadrupled my rate.  It was a royal pain in the ass.

Can't remember if we've talked in the past -- I think we might've traded a DM or two before on insurance matters. California is a bear but if it's the right fit, we might be able to help. Happy to take a look (again, if we've done this before). I get what you're saying about what a wildfire would have to do to reach your home but take a look at what happened to Lahaina in Hawaii and also entire towns in Northern CA wiped out by fire a few years back. Ruidoso experienced a major "in-town" fire.

 

On 7/1/2024 at 2:51 PM, Nice Guy Eddie said:

Home owner for 20 years and never made a home claim so I'm clueless to that side of the equation.

I've heard people comment that, after minor roof damage due to reported hail, they're able to get a brand new roof for free from their insurance. Can that occur? Because if so, that makes me wonder if the insurance company are good stewards of the premiums they receive. I would want my insurance company to tell a homeowner with a 20+ years old roof to pound sand if they get minor roof damage.

They're probably full of shit, unless they're with a Chubb or another HNW carrier -- even moreso if the damage is truly "minor." Most of the middle market carriers are settling claims with a depreciating roof schedule these days. Hell, PURE and some of the other HNW carriers put you on a schedule once your comp shingle roof gets to 20 years old.

 

On 7/1/2024 at 3:31 PM, partytimesausage said:

I'm heavily leaning on the idea to let my Home owners lapse and self insure.  Talk me out of it. 

1)  I'm very handy and capable of fixing most things. 

2)  If the house burned down, It would suck but i could take the financial hit. 

3)  Been in the house since 2017 and even with big events that cause damage the deductible is always more then the repairs so it never pays.  Just feels wasteful and irritated that the premiums have run way out of control. 

 

 

Premium is up to 7k a year up from 2000 in 2017.  Shopped it and broker could not get a better price. 

As mentioned above if you don't have a mortgage, you're not obligated to buy it. However, as T-Boo said you don't want to go "naked" as you have liability exposure no matter what -- and that's the really diabolical part. You have a pretty good idea what your house is worth from a property perspective. You have no idea how much you could get with on a liability judgement when somebody drowns in your pool or falls down your stairs, etc.

Before you drop it all together, I'd consider a policy with extremely high deductibles. For most Americans, homes are their single-largest investment. In addition to fire or wind (hurricane, tornado, etc), you can very quickly have a six-figure loss due to water from things like pipes bursting or hot water heaters exploding in the attic.

 

17 hours ago, wild_turkey said:

It seems like there is an insurance bubble ready to pop. I wouldn’t be surprised if many families either can’t find coverage period or can’t afford the coverage they are offered, leaving them with no choice but to be uninsured, a situation that would’ve been unthinkable 5 years ago.

That’s a crisis waiting to happen. If enough people are forced to go that route in a high risk area, and then a major natural disaster strikes, there could be a lot of homeless families.

Perhaps the cost of insurance will become a bigger factor in the decision making of buying a home, how big of a home to buy, or what region to live in. Perhaps the cost of owning and insuring a home in certain areas like the gulf coast will skyrocket, making people less willing to live there. Sadly, maybe that’s how it has to be.

The Daily did a podcast on this topic not long ago:

https://podcasts.apple.com/us/podcast/the-daily/id1200361736?i=1000655653194

Hit on this a bit above. My main account manager was telling me about a story she read in Insurance Journal today that discussed some Florida homeowners. Apparently, the flood maps were recently redrawn and now, all of a sudden, a bunch of homeowners now find their properties are in a zone that mandates they buy flood insurance. As you can imagine, rates are brutal when you get into zones where lenders require you to purchase insurance. They haven't ever had this expense and haven't budgeted for it. They can't afford it. Their solution? Dropping their wind policies and using that money to buy flood.

 

11 hours ago, Jiggy-Z said:

Im getting pushback from some due to value. Over 700k seems to be an issue.

Also, we have commercial standing seam roof, commercial 4 ply TPO gravel balasted roof, and commercial hydro tech garden roof over concrefe roof deck.  So we will never have a roof claim, at least for hail, but somehow this is a problem all of a sudden.

Feel free to shoot me a DM. We're much better on the 'bigger' stuff ($1M+ and above on homes). Can't promise anything can be done by us but can always look.

I think you mentioned USAA above. If you qualify for it, you likely won't find lower rates. And while I think USAA's service has slipped over the years as they've opened up eligibility to more and more people, I think it's probably as good a landing spot for the middle market as you're going to find. As homes get to $1M-$2M, it's my opinion that you probably have outgrown what they can do service wise (USAA does have access to Chubb and PURE paper for higher-value homes but their agents don't know shit-from-shinola when it comes to these policies).

I deal with this shit every single day. It's fucking brutal out there.

[ROFL BOX 6647]

5 hours ago, C-Man said:

and some of the other HNW carriers put you on a schedule once your comp shingle roof gets to 20 years old.

Ummm... 🤔

 I thought it was "50% or more of the expected lifespan", i.e. a common 30 year shingle is aged 15 years or more, a 3Tab (with an expected life of 20.years) is aged 10 years or more.

❓️

[C-Man 27184]

5 hours ago, ROFL BOX said:

Ummm... 🤔

 I thought it was "50% or more of the expected lifespan", i.e. a common 30 year shingle is aged 15 years or more, a 3Tab (with an expected life of 20.years) is aged 10 years or more.

❓️

Yeah, you're getting into the weeds a bit on me here. We didn't used to have roof depreciation schedules with any of the HNW carriers but they're now adjusting. I'd have to look it up to be sure but I think PURE offers 100% replacement cost for comp shingle roofs until they're 21 years old. Safeco *might* be the same, I can't remember. PURE also doesn't start depreciating slate roofs until 51, something like that.

The bottom line is that HNW carriers used to give 100% no matter the age of the roof, no questions asked. That is still the case with some of these carriers but they're slowly phasing that out. They also used to pay people and then didn't really follow up to make sure the work was done. For instance, Chubb and PURE have examples of giving somebody $500K to replace a roof and the homeowner pockets the cash and then might pay $50K to "patch" the really bad areas. It was bad business all the way around. Now, you'll see carriers give half the settlement up front and then pay the rest when the work has been completed and verified.

Edited July 3 by C-Man

[ROFL BOX 6647]

Yeah, my depreciation invoices show not only the payment info (check amount, bank name, amount paid) .

I also include pictures of the crew working & it is identifiable as to what actual house it is, not simply a pic taken frim 5 feet away.

[Sbbruin 21829]

10 hours ago, C-Man said:

 

 

Can't remember if we've talked in the past -- I think we might've traded a DM or two before on insurance matters. California is a bear but if it's the right fit, we might be able to help. Happy to take a look (again, if we've done this before). I get what you're saying about what a wildfire would have to do to reach your home but take a look at what happened to Lahaina in Hawaii and also entire towns in Northern CA wiped out by fire a few years back. Ruidoso experienced a major "in-town" fire.

 

We may have.  Can't remember.  I've already bit the bullet.  Kick in the nuts.

[Sandman 3403]

I got a decent quote recently, but they want to double my wind and hail deductible to 2%. Fuck that shit, I'll stay where I'm at for now.

[C-Man 27184]

40 minutes ago, Sandman said:

I got a decent quote recently, but they want to double my wind and hail deductible to 2%. Fuck that shit, I'll stay where I'm at for now.

2% is going to be the new standard moving forward. Less than that will be unicorns before long.

56 minutes ago, Sbbruin said:

We may have.  Can't remember.  I've already bit the bullet.  Kick in the nuts.

Is the California Fair Plan a minimum earned premium policy? Or are you free to switch if you find something better?

[C-Man 27184]

US P&C Underwriting is over $20B in the red for the second straight year (EDIT: changing the actual loss from $20M to $20B -- sorry about that!)

https://www.insurancejournal.com/news/national/2024/07/03/782302.htm#

 

Quote

For the second year in a row, the U.S. property/casualty industry booked an underwriting loss of more than $20 billion primarily due to the lackluster performance of personal auto and home insurance lines.

The total U.S. P/C underwriting loss in 2023 was about $21.6 billion compared to an underwriting loss of $25.8 billion the year prior.

According to a financial review of the industry by AM Best, homeowners/farmowners and private passenger auto insurance segments took an underwriting loss of $32.8 billion in 2023, which was actually an improvement from the $40 billion underwriting loss the pair of lines had in 2022.

Home and auto also logged an underwriting loss in 2021 (about $9.1 billion). Since 2021, home and auto have recorded combined ratios of 102.1, 109.9, and 106.7, respectively, as losses outpaced 11.7% growth in premiums earned in 2023.

More weather-related events and higher repair costs have hurt each line, plus auto has dealt with higher medical costs and fatality rates. The duo has earned a negative outlook from the industry rating agency.

David Blades, associate director of industry research and analytics at AM Best, said most of the catastrophe losses paid out by home and auto insurers in 2023 were from secondary perils. Only one hurricane, Idalia, made landfall in 2023. The Atlantic hurricane season in 2024 has already seen the earliest ever Category 5 storm, and is expected to be extremely active.

Blades said personal lines carriers have been seeking rate increases but “regulatory constraints, inflationary pressures and more frequent and severe weather-related events continue to dampen results.”

AM Best said property reinsurance placements have recently gone smoother than prior renewal periods, but challenges in the market have caused higher retentions and co-participation levels for many primary insurers.

“The ability to absorb multiple events from primary and secondary perils, both financially and operationally, in a relatively short period of time is become even more important,” AM Best said.

Commercial lines saw underwriting income of about $10.3 billion in 2023, but that was nearly 30% lower than in 2022. The segment in the U.S. was supported by positive results in workers’ compensation, surety, and the combined results of professional liability, directors and officers, errors and omissions, cyber and other lines AM Best groups into the “other liability – claims made” category.

However, commercial auto and property lines have each recorded underwriting losses for each of the last five years. Most recently, commercial auto’s underwriting loss in 2023 widened to about $5.2 billion. Commercial property booked an underwriting loss of nearly $1.5 billion, an improvement from a loss of about $2.2 billion in 2022, $5 billion in 2021, and about $6 billion in 2020.

AM Best has tagged commercial auto with a negative outlook as rate increases and expense cuts haven’t been enough to combat economic and social inflation. The line’s 2023 combined ratio was 109.2.

U.S. commercial property maintains a stable outlook, as premium growth of around 20% exceeded incurred losses and loss adjustment expenses.

The Best’s Special Report, “U.S. P/C Insurers Achieve Record Investment Income in 2023,” reported a 1.4% increase in net investment income improvement over the previous year.

Net investment income in 2022 was skewed by a $10.8 billion intercompany distribution at a very large reinsurer, which flowed through net investment income, AM Best said.

Adjusted for this one-time transaction, the growth in the industry’s net investment income would have been nearly 20% in 2023, the rating agency added.

The growth in investment income — an important factor in making up for poor underwriting results as a result of increased weather and catastrophe events — helped to partially offset unfavorable performance in lines of business such as auto and homeowners.

The U.S. homeowners insurance segment posted its worst underwriting results in over a decade in 2023, according to an analysis by S&P Global Market Intelligence.

The net combined ratio for the homeowners business, excluding policyholders’ dividends, was 110.5 in 2023, the highest since 2011 (121.9).

Auto wasn’t much better. Auto insurers posted a less-than-desirable combined ratio of 104.9 in 2023, but the result was about 7 points better than in the historically bad year of 2022, according to S&P Global Market Intelligence.

“Aggregate net underwriting income has been volatile in the last 10 years — and often negative across the industry — and so investment income remains vital to earnings,” said Helen Andersen, industry analyst, AM Best. “Property/casualty carriers have had to balance their risk appetites with the need for higher returns when deciding on investment strategies in a rapidly changing economic landscape.”

AM Best said the P/C industry has shifted to riskier assets (also known as alternative investments like real estate, hedge funds and/or private equity interests) in its portfolio in the search of higher yields, but the percentage of Schedule BA assets within the total portfolio dropped to 6.6% in 2023 from 8.1% in the previous year.

At the same time, the share of total stocks increased dramatically in 2023, to $667 billion from approximately $600 billion.

Stocks as a percentage of surplus increased by about 10 percentage points, to 70%, as growth in stock holdings outpaced growth in surplus.

This has been a year of insurance sticker shock in the US. But the man who provides insurance to insurers thinks maybe the shock still isn’t enough to steer people away from risk in a changing climate.

“There is not a lot of action yet, not enough,” Jacques de Vaucleroy, chairman of Swiss Re, said in a recent interview at the company’s Manhattan offices. Homes are still being built in places they shouldn’t be, he noted, and often grandly at that. Premiums relative to the potential payout for a claim are still acceptable for many consumers, he added.

Such a view might infuriate homeowners in Florida, where the average premium has topped $5,000 and where more than 1 million residents have turned to the state-backed insurer of last resort because they can’t find or afford a policy on the private market. But reinsurers like Swiss Re have a more global view.

So perhaps it’s understandable that de Vaucleroy believes more expensive insurance will have beneficial effects. “My hope is that when it starts to bite, we will see that the traditional responses are not working,” he said. “Then there will be way more money, way more interest” in steps to mitigate and adapt to climate impacts, and even in informed retreat from risky areas.

Getting granular information on US home insurance costs is difficult because insurers have fought efforts to systematically collect Zip-code-level data on premiums. However, researchers Benjamin Keys and Philip Mulder recently tried a new approach of gathering data through mortgage escrow payment servicers. In a National Bureau of Economic Research working paper published this month, they write that average nominal home insurance premiums across the US increased by 33% between 2020 and 2023, from $1,902 to $2,530. That represents a 13% real increase.

Their paper also puts a clear price on local catastrophe risk, finding that “one standard deviation increase in disaster risk is associated with an average annual premium increase of $335.”

But the most relevant finding might be who is to blame for soaring insurance costs. Among many factors, including inflation and higher home values, the cost of reinsurance for insurers is the biggest culprit. Prices for US property catastrophe reinsurance doubled between 2018 and 2023, Keys and Mulder write, in part because reinsurers had a “climate epiphany” and realized the need to reprice risk. That explains “nearly two-thirds of the increase in the pass-through of risk to premiums,” they note.

Not surprisingly, de Vaucleroy was quick to push back on that, saying inflation and big, high-value houses are still very much factors. But he does see a world where risk is rising and reinsurance has gotten the religion of pricing it. He’d like to see others follow.

“In France, there are areas where over the last two years it flooded five times,” he said, yet “it is still possible to build a new house there.” He said there is “blame” for people still willing to keep building, but also for authorities who allow it.

The NBER paper estimates that the 5% of US households that are most climate-exposed will see insurance rates rise at least $700 by 2053. De Vaucleroy wouldn’t put a number on it, but he agreed prices will continue their upward trend.

The “optimistic” scenario, he said, is that the higher prices force changes that make everyone more prepared for risk. He offered as a parable a past reckoning within the insurance industry. When a strong market demand arose for cybersecurity insurance, insurers initially couldn’t meet it because they didn’t understand the risks. This forced companies to get a better grip on the security of their own systems, including by training all personnel to be alert and putting more cyberthreat experts on staff.

Similarly, people and public officials have to start modifying their behavior as climate impacts mount. “There is still not a lot of positive action, there is mostly reaction,” said de Vaucleroy, but as costs go up, “public policy will evolve. There will be adaptation measures, mitigation, avoidance and so on. We need that to come into place.”

Underwriting losses in 2022 totaled $24.8 billion.

Net income is at the lowest level seen in more than 10 years, the companies reported.

In 2023, in net income declined to $35.7 billion, compared to $44 billion the preceding year, representing a 19 percent decrease.

Incurred losses and loss adjustment expenses for 2023 increased by 10.1 percent, while earned premiums grew by 9.9 percent, the analysis showed.

The combined ratio showed little change at 101.6 percent in 2023 versus 102.4 percent in 2022.

The results for 2023, as shown in the table below, represent consolidated estimates derived from annual statements submitted by insurers to insurance regulators.

The results, according to Verisk and the APCIA, are based on approximately 96.9 percent of all business underwritten by private U.S. property/casualty insurers.

“Insurers experienced a second straight year of net underwriting losses with over $21 billion in red ink in 2023 following nearly $25 billion in 2022,” said Robert Gordon, senior vice president of policy, research, and international at APCIA. “While overall industry surplus – representing the supply capacity for insurance coverage – modestly increased in 2023 thanks to investment gains, it has still not recovered from the $72 billion contraction in 2022 and fell to a five-year low relative to premium revenue. Homeowners and auto insurance performed particularly poorly: in both 2022 and 2023, loss ratios exceeded levels not seen in more than 20 prior years. As insured losses skyrocket, many policyholders in the U.S. face rising insurance costs and availability challenges, which is why the insurance industry is analyzing these issues and advocating for solutions. However, the market won’t fully stabilize until insurers can close the gap between losses and rates.”

Policyholders’ surplus improved from Q3’s $950.8 billion to $1,014.8 billion in 2023, though insurers’ rate of return on average policyholders’ surplus decreased to 3.6 percent in 2023, down from 4.4 percent in 2022.

Year-over-year improvement is seen in the fourth quarter in premiums and combined ratios, attributable to a sharp decrease in cat events, the analysis showed.

In the fourth quarter of 2023, the industry’s net income increased to $18.8 billion, up from $10.6 billion in the same period of 2022.

“Despite only one U.S. landfalling hurricane in 2023, we saw elevated catastrophe activity. Severe convective storms were a key driver of underwriting results for the year, particularly in homeowners,” said Saurabh Khemka, co-president of underwriting solutions at Verisk. “On the premium side, the hard market and steady exposure growth have eased some of the pressures in commercial lines. However, even with another year of double-digit rate increases, rate adequacy continues to be a major challenge for personal auto driven by inflation, supply chain shortages, and labor shortages.”

Some additional insights show that while the first half of the year experienced record-breaking catastrophe activity, there was below-average activity in the second half.

Catastrophe losses in the last quarter of 2023 were the lowest quarterly losses recorded since 2015 and the fewest quarterly losses since 2016, the joint analysis showed.

Net written premiums increased by $17.9 billion in the fourth quarter of 2023, representing a growth of 9.7 percent compared to the previous year.

Net underwriting gains rose to $9.7 billion in the fourth quarter of 2023, rebounding from $3.7 billion in losses reported in the same quarter one year earlier, the Verisk/APCIA analysis revealed..

The combined ratio improved from 103.0 percent in the fourth quarter of 2022 to 96.8 in the same period this year.

 

Edited July 8 by C-Man

[ROFL BOX 6647]

11 hours ago, C-Man said:

US P&C Underwriting is over $20M in the red for the second straight year

https://www.insurancejournal.com/news/national/2024/07/03/782302.htm#

 

 

Damn, LongCat is long.

 

I bailed after the 4th paragraph.

[Catpfish 618]

On 7/3/2024 at 12:28 PM, C-Man said:

2% is going to be the new standard moving forward. Less than that will be unicorns before long.

 

I've heard (but not verified) that Farm Bureau bumps it to 3% after a certain valuation is reached and it's not that high...something like $700K.  Full disclosure, this is from my uncle that is with the local Farm Bureau but takes 30 minutes to give a 2 minute answer.  I might have been zoned out.

[C-Man 27184]

5 minutes ago, Catpfish said:

I've heard (but not verified) that Farm Bureau bumps it to 3% after a certain valuation is reached and it's not that high...something like $700K.  Full disclosure, this is from my uncle that is with the local Farm Bureau but takes 30 minutes to give a 2 minute answer.  I might have been zoned out.

I don't know the answer to that question WRT to Farm Bureau. The HNW carriers actually go the other direction -- at certain Cov A (Dwelling) limits, the wind/hail deductible can be decreased from 2% to 1% and even 0.5% (I think) for homes $5M and up.

[HOOKEM4 5036]

I got a message that my carrier for the last 10 years or so, Encompass, is no longer offering insurance in my area. At least they gave me a month heads up. Not looking forward to what is coming. 

[C-Man 27184]

4 hours ago, HOOKEM4 said:

I got a message that my carrier for the last 10 years or so, Encompass, is no longer offering insurance in my area. At least they gave me a month heads up. Not looking forward to what is coming. 

Don't pat Encompass on the back for that. Carriers are required by law to give clients notice of non-renewal or cancellation for any reason other than non-payment of premium. I'm pretty sure it's supposed be 45-60 days out but might be 30. I can't remember.

[HOOKEM4 5036]

24 minutes ago, C-Man said:

Don't pat Encompass on the back for that. Carriers are required by law to give clients notice of non-renewal or cancellation for any reason other than non-payment of premium. I'm pretty sure it's supposed be 45-60 days out but might be 30. I can't remember.

Oh I am not happy. They probably gave me 45 days. It has been a few weeks since I got the letter. I use Watkins insurance so I am just waiting to see what policy options I have. Encompass made a killing off me over the years. Just looking at what I pay for all insurance on everything from home/auto/health, it is an absolutely insane amount. I don't see how it can keep going up.

[tx 3 putt 76868]

Any suggestions for a high risk auto insurance client ?

[UTPhil2006 3802]

7 hours ago, tx 3 putt said:

Any suggestions for a high risk auto insurance client ?

Define high risk? Credit? Or might stab you?

[ROFL BOX 6647]

Probably a 16 year old, male, vehicle is a mid 90's BMW or Mustang.

[ChickenSandwich 9824]

[tx 3 putt 76868]

Shoot you, not stab