According to Conning Research, the last five years have been relatively good for homeowners insurers, as insurers saw an average 11% return on surplus driven by strong premium growth and improved loss costs. But, they are now predicting more challenging times for home insurers in the next few years. In addition to stiff price competition, the shaky US economy will also bring additional challenges, as elevated housing inventories suppress growth while decreasing home values present insurance-to-value issues. Added to that is the threat that inflation will increase the cost of the average homeowners claim while premium volume declines.

The Conning Research study titled, “The Homeowners Insurance Market: The Eye of the Storm,” analyzes the economic and regulatory pressures on the line, as well as issues related to catastrophe management and also suggests the possibility that traditional distribution channels may change. “Research indicates that those insurers who have innovated in technology and are willing to innovate in policy simplification and more sophisticated pricing approaches will be at a significant advantage in this challenging environment,” stated Stephan Christiansen, director of research at Conning.

Challenges Looming for Homeowners Insurance (Conning Research 10/1/08)

October 15, 2008