According to the Insurance Information Institute (Triple-I), a US-based insurance industry research and education organisation, rising premiums and tighter coverage options continue to challenge household budgets across the country.
Triple-I’s latest Issues Brief indicates that the US homeowners insurance segment is expected to achieve double-digit growth in net written premiums in 2025. Triple-I further projects that the segment could return to overall profitability in 2026, a shift that may gradually strengthen market conditions and support more consistent pricing for policyholders over time.
Triple-I explains that inflation, high rebuilding costs and ongoing climate-related losses remain the primary forces shaping premiums and coverage availability. The organisation notes that losses from the Los Angeles wildfires contributed to the weakest first-quarter homeowners underwriting results since 2011.
However, Triple-I reports that results improved significantly in the second quarter of 2025, with the direct incurred loss ratio falling to 58.9%, the strongest second-quarter performance in more than 15 years. Despite this improvement, Triple-I emphasises that many homeowners continue to experience financial pressure from higher insurance costs.
Based on Triple-I forecasts, the net combined ratio for homeowners insurance is expected to reach 107.2 in 2025, representing a 7.5-point improvement from 2024, though still above profitability thresholds. Triple-I projects net written premium growth of 11.8% in 2025, slightly below the prior two years but consistent with ongoing inflation and loss patterns.
Triple-I also reports that the second-quarter 2025 home direct incurred loss ratio improved by roughly 22 points compared with the same period in 2024. In 2024, homeowners insurance accounted for 15.6% of all US property and casualty premiums, according to Triple-I, highlighting the segment’s importance to overall industry results.
Economic factors influencing premium growth shifted from a negative contribution in 2024 to modestly positive in 2025, Triple-I notes. The organisation adds that anticipated interest rate cuts could take about a year to influence mortgage rates and may support increased housing construction in 2026 and 2027.
Triple-I identifies rising rebuilding costs as a central driver of higher premiums. Structural replacement costs have increased by nearly 30% over the past five years, driven by supply chain disruptions, higher material prices and labour shortages, according to Triple-I analysis. Citing a 2025 Verisk report, Triple-I notes that total replacement costs reached $31 billion last year.
These cost pressures are directly affecting consumers. Triple-I points to a 2025 Nationwide survey showing that 43% of homeowners identified rising insurance costs as their primary financial concern, while TransUnion data cited by Triple-I indicates that rate shopping increased by about 5% year over year in the first quarter of 2025.
“Homeowners replacement costs have increased substantially due to ongoing supply chain issues and labour constraints,” commented Sean Kevelighan, Triple-I CEO. “Tariffs implemented this year are also expected to push claim payouts and premiums higher in the near term.”
Triple-I stresses that financial strength within the insurance sector is critical for maintaining coverage availability. According to Triple-I, insurers must remain financially sound to pay claims promptly after disasters, continue writing policies in higher-risk regions and invest in tools that help reduce future losses.
The organisation warns that if profitability weakens significantly, insurers may reduce coverage offerings, exit certain markets or raise premiums further, which can intensify affordability and availability challenges for consumers. A more stable market, Triple-I notes, supports reliable claims-paying ability and encourages long-term investment in risk reduction.
Climate-related losses continue to be a major factor influencing homeowners insurance performance, according to Triple-I. While the US experienced no major hurricane landfalls during the 2025 Atlantic season for the first time since 2015, Triple-I reports that losses from other weather events remain elevated.
The organisation highlights that severe thunderstorms, wildfires and heavy rainfall are occurring more frequently and are responsible for a growing share of insured losses. Triple-I cites Gallagher Re data showing that, in addition to the Los Angeles wildfires, 18 other billion-dollar weather events have occurred in the US so far in 2025, with all but one linked to severe convective storms. These events caused more than $61 billion in damage, marking the third consecutive year with severe convective storm losses exceeding $50 billion.
Triple-I also notes that proposed federal budget reductions affecting agencies such as NOAA, EPA and NASA could limit access to climate and weather data used for risk assessment and mitigation.
While FEMA continues to operate, Triple-I observes that discussions around shifting certain federal responsibilities to states could increase financial pressure on property owners, insurers and local governments. The organisation points to nonprofit groups, including Climate Central, that are working to preserve access to climate data, including a recently relaunched database tracking billion-dollar US disasters.
According to Triple-I, advances in technology are helping insurers improve risk assessment and loss prevention, which can support pricing stability over time. Tools such as artificial intelligence, aerial imagery and smart home sensors are increasingly used to refine underwriting, accelerate claims resolution and reduce losses through early detection.
Triple-I references a recent Insurance Research Council survey showing that homeowners familiar with these technologies are more likely to view insurance pricing as fair and to believe they receive better value from their coverage.
“Technology is reshaping the homeowners insurance market by enhancing risk management,” Kevelighan added. “Predictive analytics, AI and smart home tools allow insurers to better assess and prevent losses, which reinforces market stability and helps homeowners recover faster when disasters strike.”
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