According to AM Best, the U.S. residual property insurance market has seen an influx of personal lines business that far exceeds commercial lines business, with much of the new business coming from the increased frequency and severity of secondary peril losses. It is being carried out in the most affected states.
AM Best notes in a new report that the number of policies in U.S. residual market plans nearly doubled from 2018 to 2023, with most of that increase occurring after 2020.
The agency notes that rising claims costs in several weather-related catastrophe-prone states are causing market-recognized insurers to reduce their real estate exposure to specific areas within those states in some cases. It highlights how this growth has caused investors to reconsider their risk appetite.
AM Best also said recent hurricanes Helen and Milton may weaken the risk appetite of voluntary market insurers that provide coverage to homeowners in affected states such as Florida, Georgia and North Carolina. said that it was high.
In addition, a total of 33 states and the District of Columbia have offered qualified individuals and We provide home insurance to businesses. .
This plan was created to provide insurance coverage in areas where property owners are exposed to significantly higher risks than they can control.
“FAIR Plan insurance may be more expensive and offer less coverage than private insurance in the voluntary market, but it provides policyholders with benefits that would not otherwise exist,” said David Blaise, associate director at AM Best. “Provides insurance protection.”
It is worth highlighting that seven states on the Atlantic and Gulf coasts – Alabama, Florida, Mississippi, New York, North Carolina, South Carolina, and Texas – have plans equivalent to the FAIR Plan, called the Beach and Windstorm Plan, It’s about providing services to local residents and business owners. Coverage for hurricanes and other severe storms.
AM Best noted that the underwriting performance of homeowner business through these FAIR plans decreased to a combined ratio of 110.9 in 2023, up from 104.5 in 2022.
Among individual state residual market entities, Florida’s Citizens Property Insurance Corporation continues to be the clear front runner in both annual policy volume and gross written premiums, with state residents receiving 68.7% of direct written premiums; It accounts for 52.7% of all insurance provided by FAIR plans. us.
Finally, AM Best said FAIR plans in Georgia, Louisiana, and Florida all reported more than 200% increases in the number of policies, likely due to an increase in the frequency of severe weather-related events. This is thought to be due to an increase in the total amount of insured losses.
