According to a report by the rating agency AM Best, due to the combined impact of natural disasters, inflation, and population growth in disaster-prone areas, U.S. home insurers experienced the worst underwriting losses of the century in 2023.
Companies providing homeowners insurance suffered a net underwriting loss of $15.2 billion last year, according to AM Best data. This is the worst since 2000 and more than double the losses from the previous year.
The report indicates that the population increase in areas vulnerable to natural disasters is a key factor. Census data shows that six states prone to severe weather, including California, Texas, and Washington, accounted for half of the nation's population growth in the 2010s.
Christopher Graham, senior industry analyst at AM Best, stated, "An increase in population means a significant rise in real estate development and insurance values."
"The proliferation of buildings in disaster-prone areas has increased flood risks. Meanwhile, human activities and utility companies have also heightened the risk of wildfires in these regions," he added.
AM Best indicated that a rebound in underwriting profits in this field is unlikely in the short term.
