2024 U.S. Home Trends Report Reveals Impact of Hail and Catastrophes on Insurance Costs

LexisNexis Risk Solutions has published its 2024 U.S. Home Trends Report, offering a comprehensive analysis of by-peril trends in the home insurance industry. The report highlights significant increases in loss costs, especially in relation to catastrophic events, which continue to challenge insurers. Overall, All Peril loss costs rose by 4.1% between 2022 and 2023 and by a staggering 51.7% compared to 2019. Catastrophe claims represented 46% of all claims in 2023, marking the highest level in seven years, largely driven by weather-related disasters.

Hail proved to be a major factor in these rising costs, with hail-related loss costs jumping by 57.9% from 2022 to 2023, while frequency increased by 53.6%. The states most affected by hail, including Colorado, Nebraska, and Wyoming, were hit particularly hard, with 71% of hail claims deemed catastrophic. Catastrophic events like these are leading to growing pressure on insurers, requiring them to make strategic decisions about coverage and pricing to maintain profitability.

Despite this, the report does offer some relief in the form of declining loss costs for other perils, such as fire and lightning, which saw an 11.1% decrease in loss costs, along with reductions in weather-related water perils (down 51.4%) and non-weather-related water events (down 11.2%). These drops are attributed to seasonal variabilities and less severe weather conditions in specific regions.

The report stresses the importance of using long-term data to assess risk accurately, as some perils, while showing short-term declines, remain on an upward trajectory over a seven-year period. For instance, although severity dropped by 6.3% in 2023, it is still nearly 30% higher than it was in 2019. The findings suggest that home insurers must be agile and data-driven, considering both macro-level trends and geographic variabilities to stay competitive and ensure profitability in a volatile market.