42% of homeowners say insurance costs have gone up 'a lot,' survey finds. Here's why
A recent survey reveals that 42% of homeowners have experienced significant increases in their insurance costs. This rise is attributed to more homes being built in high-risk climate areas, leading to higher potential losses. Additionally, changes in insurance assessment methods and a challenging reinsurance market have contributed to the trend of rising premiums.
- ▪42% of homeowners report a significant increase in insurance costs.
- ▪Nearly 1 million new homes were built in high-risk climate areas between 2018 and 2022.
- ▪Insurers are shifting to predictive models for risk assessment, affecting premium pricing.
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Research indicates that an increase in insurance losses in recent years is partly due to more people building new homes in areas with higher climate risk, according to the Treasury. For example, nearly 1 million new homes were built in the areas with the highest risk between 2018 and 2022, it said. Further, increased demand for housing in such areas tends to raise property values, thereby leading to higher potential losses to homeowners if climate disasters do occur, it wrote. 5. ReinsuranceInsurers often buy reinsurance as a financial backstop against big losses they may have to incur in order to pay consumers' insurance claims.
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