The Allstate Corp. and Farmers Insurance Group of Cos. obtained the greatest number of rate increase approvals for homeowners insurance during the first half of 2021 as the industry sought to get ahead of losses from recent catastrophes and rising prices for home repair materials.
Allstate and Farmers Insurance secured approvals for 197 total rate increases across the U.S., more than the other three largest insurers combined, according to S&P Global Market Intelligence data. The two groups also received rate increase approvals in more states compared with the three others, with Allstate receiving approvals in 32 states and Farmers Insurance in 27.
Allstate and Farmers Insurance registered their largest cumulative positive premium changes in Texas. Farmers Insurance's rate hike requests in the Lone Star State led to $75.8 million of premium increase for the group, while the approved rate hikes for Allstate generated $50.2 million of additional premium.
Allstate received approval via three filings to effectively raise rates in Missouri by 26.64%, the highest overall rate impact in any state among the top insurers.
Liberty Mutual Holding Co. Inc. secured rate hike approvals in 20 states, State Farm Mutual Automobile Insurance Co. in 13 states, and United Services Automobile Association in 10 states.
After natural disasters elevated losses for home insurers in 2020, the following year saw inflationary pressure on the cost of homebuilding materials as supplies tightened and demand for homes soared.
Allstate and other large insurers can better handle escalating prices in the cost of building materials needed for home repairs because of inflationary provisions in their policies. Allstate could also sustain short-term cost increases in home repair supplies by leveraging purchasing power in the marketplace for flooring, roofing and other materials to keep prices manageable, said Glenn Shapiro, president of personal property-liability, during the company's quarterly earnings call.
"With our size, with our buying power and with the capabilities of our claims team, we've been able to do that," Shapiro said, according to a transcript.
Liberty Mutual also baked inflation into its homeowners rates, according to Timothy Sweeney, president of global retail markets. The insurer saw construction costs, including material and labor, go up 20% compared to the previous year, but its inflation provision had the effect of hiking rates by 18%, Sweeney said during a quarterly earnings call. The executive did note that the factors pushing up homebuilding material prices during the first half of the year seem to be abating.
The Hartford Financial Services Group Inc. also had to adjust for the increase in home repair costs during the first half, President Douglas Elliot said during an earnings call. Those expenses rose most sharply during the second quarter, and The Hartford expects the trends to continue into the rest of the year, Elliot said. The insurer believes it has modeled its business well enough to absorb the shift, with the president noting that expectations for the year have not materially changed given the trends.
