U.S. home insurers suffered their worst losses of the 21st century in 2023, the Financial Times reported. Figures reported by rating agency AM Best, insurance companies providing coverage to homeowners incurred a $15.2 billion net underwriting loss last year, the worst loss since 2000 and over double the losses incurred in 2022.
According to the Financial Times, such losses were largely attributed to a large number of natural disasters along with rampant inflation and population growth in at-risk cities and other areas that happen to be more prone to natural disasters. According to the U.S. Census, about half of the country’s population growth in the 2010s came in six U.S. states all prone to severe weather conditions, including California and Texas.
As a result of the surge in underwriting losses, insurance companies that cover residential properties are withdrawing from markets where natural disasters and spiking costs of living are increasingly prominent. Alternatively, many are hiking their insurance premiums and adjusting their policies and areas of coverage, causing major concern for some homeowners located in these affected areas.