...for 2020 with a stable prospective return on equity for insurers assuming normalized catastrophe losses.
The report, which provides a wide range of key data points on the sector, reveals that U.S. homeowners direct written premiums were projected to reach $105 billion in 2020 given prospective rate activity and documented growth through the second quarter – an increase on the $104 billion total recorded in 2019.
Meanwhile, a prospective 6.6 percent return-on-equity was forecast for U.S. national multiline insurers into 2021 – an increase on the 6.5 percent reported in last year’s forecast. Achieved return-on-equity for 2020 will likely fall short of the actuarial forecast due to catastrophe loss activity from multiple perils including hurricanes, wildfires, and severe convective storm events.
The study highlights that U.S. homeowners insurers secured an average countrywide approved rate increase of three percent during the 18 months to September 2020, with the strongest rate momentum seen in California and Florida, where eight percent and six percent increases were witnessed, respectively.
The COVID-19 pandemic and associated economic downturn have had little effect on homeowners business, with loss activity largely unimpacted by the macro-economic and health circumstances.
Greg Heerde, Head of Americas Analytics for Aon’s Reinsurance Solutions business, said: “Our analyses show that the prospective returns of the U.S. homeowners sector remain stable. Looking ahead, and despite the economic headwinds we are currently experiencing, a host of support programs including loan forbearance, COVID premium assistance offered by insurers, and fiscal stimulus to the owners of the homes and policies should help prevent premium contraction in 2020.”
Paul Eaton, Senior Managing Director in Analytics for Reinsurance Solutions, added: “We are pleased to report continued positive momentum in the U.S. homeowners sector. Close attention should be paid to financials as the year draws to a close, but it should be highlighted that despite 2020 seeing landfall records in Atlantic storms and perhaps the second most damaging convective storm and wildfire seasons on record, we’re still far short of several of the annual industry catastrophe loss totals recorded in the 21st century.”
Developed by Aon’s Reinsurance Solution’s Analytics team and updated annually, the Homeowners ROE Outlook report provides a comprehensive analysis of the U.S. homeowners insurance sector, based on industry state level statutory financial filing information along with rate filings and supporting actuarial information.
To view the Homeowners ROE Outlook – November 2020 report, please follow the link:
http://thoughtleadership.aon.com/Documents/20201028_homeowners_return_on_equity_outlook.pdf
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