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Available home insurance policies in US have dropped 53% in 2023

Insurance companies are exiting states where they have an acrimonious relationship with state regulators

Homeowners in the United States have experienced a precipitous drop-off in the availability of home insurance policies this year, with the availability of certain policies having dropped by more than half, according to a report commissioned by insurance agency Matic Insurance.

“The report illustrates a homeowner searching for coverage from 10 national carriers in March 2022 may have been eligible for an average of 6.08 home insurance policies, whereas in 2023, they would have only been offered an average of 2.87 policies, representing a substantial 53% decrease,” the report said.

Homeowners in the U.S. experienced a 35% decrease in available policies per homeowner, according to the report. It also detailed the difficulties that homeowners in various states have faced when it comes to home insurance, notably Florida and California. The exodus may be spreading to other states, as data shows that areas prone to natural disasters are seeing a spike in homebuying activity.

“For states where insurance companies are experiencing premium change request delays, denials, or caps from insurance regulators, carriers are limiting or ceasing the writing of new policies, as a means to counter unsustainable loss ratios,” the report said. “While this trend has been a longstanding challenge in Florida, it is now beginning to impact other states such as California, Georgia, South Carolina, New Jersey, New York, and Arizona.”

Insurance carriers are also becoming more likely to exit states where they have an acrimonious relationship with state regulators, according to Ben Madick, CEO and co-founder of Matic Insurance. The 53% decrease in policy availability for homeowners seeking coverage adds to supply woes, as well.

“This supply and demand issue makes securing an insurance policy, especially in problematic states, a major challenge facing homebuyers and mortgage lenders,” said Madick. “The notable decline in policy availability can lead to loan closing delays if insurance is not in place.”

The lack of binding policy availability entirely online may also be adding to certain challenges, he added.

“It’s important to note that less than 10 home insurance carriers offer the ability to bind a policy 100% online,” Madick said. “Homebuyers and lenders need to prioritize insurance from the start of the loan closing process to account for wait times, especially for consumers bypassing a digital agency and working directly with carriers.”

This is all before addressing the rise of rates themselves. In regions where rate increases are approved by states, carriers pass those increases onto consumers, and rates have increased at an average of 9% in the first half of 2023 when compared to the prior year.

Matic’s report is sourced from an average of a random sample of nine million quoted and Matic-insured properties from June 1, 2018 through June 30, 2023. Additional data regarding declination and policy availability was gathered from 30 million quote requests to Matic, as well as third-party quoting engines and carrier direct quotes.

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