Residents of Winchester, Ind., clean up after a tornado March 15, one of a series of storms that hit the Midwest that day. |
Most of the largest US homeowners insurers saw solid year-over-year growth in direct premiums written in the first quarter as they countered the rising costs from severe storms.
Insurers booked direct premiums written (DPW) of $35.71 billion in the quarter, a 13% increase from $31.60 billion a year ago, according to an S&P Global Market Intelligence analysis. Carriers' direct premiums have risen 54.2% from $23.17 billion in the first quarter of 2020.
The sector also showed marked year-over-year improvement in loss ratios during the quarter, falling 14.7 percentage points to 56.5% from 71.2% in the first quarter of 2023.
State Farm Mutual Automobile Insurance Co. remained the homeowners market-share leader as it did for the quarter in private auto. The Bloomington, Ill.-based carrier's DPW totaled $6.44 billion in the quarter, up 14.2% from $5.64 billion a year ago, for an 18% market share.
The Allstate Corp. had a 15% premium increase to $3.08 billion for a 9% market share, ahead of third-place United Services Automobile Association (USAA) which had a 7% market share on a 21% increase in DPW of $2.40 billion.
Implemented rate increases, inflation in insured home replacement costs, and growth in policies-in-force were the factors in the Allstate brand's increase in average premiums, according to the company's Form 10-Q. Rate increases of 11.7% were granted for Allstate in 15 locations, which resulted in an insurance premium impact of 3.4% for the total Allstate brand.
"[Allstate] homeowners insurance ... represents an additional growth opportunity across channels," President of Property-Liability Mario Rizzo said during an earnings call.
Rates stage a rally
Allstate was one of nine companies in the analysis that booked an increase in DPW and one of six that had double-digit rises.
American Family Insurance Group, 23.7%, and USAA, 21%, had the largest increases, followed by The Progressive Corp., 19.5%; Allstate, 15%; State Farm, 14.2%; and Chubb Ltd., 11.9%.
Progressive is focusing its homeowners' products on growing in markets that are "less susceptible to catastrophes," the company said in its Form 10-Q, while reducing its exposure to "coastal and hail-prone states." Homeowners policies-in-force increased in the first quarter by 20% year over year in the growth-oriented states.
"We want to grow across the board, so we'll continue that," CEO Tricia Griffith said during a conference call. "We are growing in what we would call growth states or more non-volatile states as far as weather, and we're shrinking in the volatile states. That's a plan we put into place quite some time ago."
The Travelers Cos. Inc. had a year-over-year increase of 6.7% ahead of Farmers and Liberty Mutual. Nationwide Mutual Insurance Co. was the only insurer in the analysis to lose ground in DPW, falling 4.1%.
Ratios recede
Loss ratios eased off in the first quarter as milder weather led to a drop in catastrophe losses, with all 10 companies seeing their ratios fall under 65%.
Allstate and Nationwide had the most dramatic changes, lowering their loss ratios year over year by over 30 percentage points. Allstate's improved 37.2 points to 50.2% from 87.4%, while Nationwide's went to 58% from 88.7%.
Progressive had the lowest loss ratio in the analysis at 46.8%, down from 59.7%. Allstate, 50.2%, had the second lowest, followed by Chubb at 50.8%; Farmers at 51.5%; and Nationwide at 58%.
Travelers' 64.7% ratio tied with State Farm for the highest in the analysis.