The outlook for the U.S. home insurance sector is negative, withAM Bestreporting that inflationary pressures, challenging regulatory environments and pressures from natural catastrophes andsecondary perilscontinue to hamper the sector’s forecast.
While home insurance carriers have attempted to address mounting losses by increasing rates and “inflation adjustment factors,”AM Best reportedrate adequacy continues to be challenged. Further, the 12-month policies in home lines make it difficult for carriers to respond to these loss trends.
Rate adequacy challenges have driven some carriers to slow business in catastrophe-prone states. This included three of California’s largest home insurers as well as a wave of moratoriums on new business in Florida, AM Best noted.
Although the personal lines segment currently carries a negative outlook, AM Best noted there are positive developments, including improving catastrophe risk management practices, sufficient liquidity and an easing of some regulatory hurdles.