AM Best — Homeowners Insurance Outlook Stable
By Jonalyn Cueto, Insurance Business
AM Best’s latest market segment report, Market Segment Outlook: US Homeowners, has raised the outlook for homeowners insurers from negative to stable. The reasons range from moderate premium growth to improved catastrophe risk management practices to a better outlook in the property reinsurance market.
The ratings company said homeowners insurers have remained resilient in spite of increasing catastrophe losses in the first half of this year. Quarter three was especially good since there was a noteworthy reduction in severe events.
AM Best senior analyst, Maurice Thomas said demand also continued to grow as claim activity rose because of extreme weather.
“Better performers within the homeowners’ insurance space maintain solid risk-adjusted capitalization with sufficient liquidity,” Thomas said. “However, the capital cushion has eroded for some carriers in high-risk areas due to material operating losses driven by severe events, most recently from the January wildfires in California and severe tornado outbreaks across the country in the first half of the year.”
Carriers — AM Best noted — keep putting pricing as a priority while facing increasing inflation and other macroeconomic factors. Expenses had to rise because of higher costs for home rebuilding and repair.
Thomas said there has also been a moderate softening of reinsurance rates.
“January 2026 renewals are expected to see further stabilization or minor price shifts, though less comparative relief is expected for primary carriers operating in catastrophe-prone states,” Thomas added. “Overall, the improving reinsurance dynamics in 2025 helped to alleviate pressures in the homeowners’ segment, fostering its resilience. Nevertheless, the segment remains inherently exposed to the effects of weather-related operating volatility.”
