(Reuters) – U.S. home insurers suffered their worst underwriting losses this century in 2023, as a toxic mix of natural disasters, inflation and population growth in vulnerable areas put a vital financial market under severe strain, according to ratings agency AM Best.
Homeowners insurance companies suffered a net underwriting loss of $15.2 billion last year, according to figures from ratings agency AM Best, which it said was the worst since at least 2000 and more than double the losses from the previous year.
The report identified population growth in areas most vulnerable to natural disasters as a major factor — citing census figures showing that six states prone to extreme weather, including California, Texas and Washington, accounted for half of the nation’s population growth in the first decade of the 21st century.
“A growing population means a greater increase in property development and therefore in insurance values,” said Christopher Graham, senior industry analyst at AM Best.
“Building in disaster-prone areas increases the risk of flooding,” he added. “It also increases the risk of wildfires in areas that are vulnerable to them due to human activity, as well as utility companies.”
AM Best said it believes a return to underwriting profitability for this sector in the near term is unlikely.
Details of AM Best’s report were first reported by the Financial Times on Sunday.
(Reporting by Disha Mishra in Bengaluru; Editing by Diane Craft)
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