AM Best: U.S. property-insurance rate growth is moderating after prior surge

AM Best said on May 18 that average approved rate increases for U.S. homeowners insurance fell in 2025 after two years of outsized hikes, a sign that headline premium growth is moving closer to pre-pandemic norms. The ratings agency said the average approved increase for homeowners policies was 8.3% in 2025, down 5.2 percentage points from a year earlier. E&E News, citing the AM Best report, said premiums are still rising, but at a slower pace than in recent years. The same coverage said insurers remain more selective about what risks they will write and what terms they will offer. ### If rate growth is slowing, what exactly changed? AM Best said the average approved homeowners rate increase dropped to 8.3% in 2025 from a higher level in 2024, which it described as a return toward pre-pandemic conditions after a period of elevated losses and large filings. The firm said its analysis was based on Best’s State Rate Filings data. (morningstar.com) David Blades, associate director at AM Best, said the improvement for U.S. homeowners insurers was driven by “aggressive rate increases” and better pricing sophistication in states with the worst results. AM Best also said the total U.S. homeowners industry loss ratio fell 9.2 percentage points, from 74.8 in 2023 to 65.6 in 2025. (morningstar.com) ### Does that mean homeowners are finally getting relief? E&E News reported on May 22 that property insurance prices are stabilizing after surging in response to extreme weather, but it did not describe the shift as a broad rollback in premiums. Its account said 2025 price hikes were significantly smaller than in 2024 and may soon level off. (morningstar.com) AM Best said in a December 2025 homeowners outlook update that premium growth remained robust even as the pace slowed. The agency said demand for homeowners coverage stayed strong because of heightened claim activity tied to extreme weather and broader economic uncertainty. ### Why are insurers still acting cautiously? (eenews.net) AM Best said carriers have become more effective at using technology to strengthen risk selection and manage losses. That means moderation in average rate increases can coincide with tighter underwriting, narrower coverage terms, higher deductibles or decisions not to renew or write certain properties, as E&E News reported. (news.ambest.com) Maurice Thomas, senior financial analyst at AM Best, said some insurers in high-risk areas saw their capital cushions erode because of severe events, including January wildfires in California and tornado outbreaks in the first half of 2025. AM Best said carriers continue to seek rate increases to maintain adequate pricing as inflation and construction costs keep loss costs elevated. (news.ambest.com) ### What role did reinsurance play? AM Best said moderate softening in property-catastrophe reinsurance rates was observed in 2025, helping relieve some pressure on primary homeowners insurers. The agency said that improved reinsurance dynamics supported its decision in December 2025 to revise the U.S. homeowners segment outlook to stable from negative. (news.ambest.com) Thomas said January 2026 renewals were expected to bring further stabilization or minor price shifts, though he added that primary carriers in catastrophe-prone states were likely to see less relief. That leaves conditions uneven even as the national average rate trend cools. ### What should homeowners watch now? The 8.3% figure is a national average for approved rate increases, not a guarantee of lower bills for any individual homeowner. (news.ambest.com) AM Best said state approval processes differ, and insurers’ recent results have varied widely by geography. E&E News said insurers are increasingly focused on “rate adequacy,” meaning premiums that better match the risk of damage. January 2026 reinsurance renewals and future state rate filings are the next concrete markers to watch, along with insurer decisions on deductibles, exclusions and renewals in catastrophe-prone markets, according to AM Best and E&E News. (news.ambest.com) (morningstar.com)