Home Insurance Rates Spike Nationwide: See MD Impact

MARYLAND — Homeowners in Maryland faced a 7.7 percent increase in their property insurance premiums in 2023 as rates soared nationwide due to climate change-linked natural disasters, according to analysts.

Premiums increased 11.3 percent nationwide through Dec. 29, 2023, according to an analysis by S&P Global Market Intelligence. At least 25 states saw rate hikes of 10 percent or greater, led by Texas (23.3 percent), Arizona (21.8 percent) and Utah (20.3 percent).

Between 2018 and 2021, the countrywide yearly average rate change ranged from 2.5% to 3.8 percent, but this jumped to 6.2% in 2022 and 11.3 percent in 2023.

Since 2018, the cost of home insurance in Maryland has jumped 32.1 percent. The biggest increase in home insurance cost for Marylanders was from 2022 to 2023. In 2022, the cost increased by 6.0 percent, but in 2023 the cost jumped by 7.7 percent.

In a recent letter, two dozen housing industry leaders, including the powerful National Association of Home Builders and National Multifamily Housing Council, urged Congress and the Biden administration to investigate the causes of spiraling insurance costs. The group proposed several remedies, including federally-backed homeowners insurance, as disasters add to an already volatile insurance industry.

“Starting around 2017, the property insurance market began to destabilize as more frequent natural catastrophes occurred, in conjunction with the inflationary impact of higher material and labor costs — which was only further exacerbated by recent pandemic-related economic strife,” the group wrote.

Insurers covered $121 billion in losses due to natural disasters in 2021 and $125 billion in 2022, both well above the 10-year average of $81 billion, the groups noted. In 2023, there were a record-high 142 insured natural disasters around the world, and insured losses of more than $100 billion for the fourth consecutive year.

Some property insurers have exited states such as California, Florida, North Carolina, Oklahoma and Texas, deeming the risk of natural disasters such as wildfires, tornadoes, hurricanes, tornadoes or earthquakes is too great.

The housing industry leaders said in the letter to Congress that people with affordable housing are being hit the hardest, with nearly one in three policies increasing by at least 25 percent in the most recent coverage renewal period.

The “lack of affordability and availability of insurance options for property owners of all types increasingly puts insurance coverage out of reach for property owners and limits their ability to make needed investments in their properties and build new housing,” they wrote, adding:

“This has both short- and long-term implications for the real estate industry’s ability to address the availability and affordability of housing at all price points.”

The effects of high insurance costs are already being felt, according to an analysis of Census Bureau American Community Survey data released Monday by Claim Guide, an online resource to help consumers navigate insurance issues.

About 5.7 percent of Maryland homeowners — about 145,182 homeowners — are living without property insurance, according to the analysis.

Nationally, more than 10.6 million homeowners, or 7.4 percent of homeowners, are living without home insurance.

States with the highest percentages of homeowners without insurance are Mississippi (13.3 percent), New Mexico (12.9 percent), West Virginia (12.3 percent) and Louisiana (12 percent). All are susceptible to natural disasters that could cause property damages, the report noted.

A survey of 1,500 homeowners by Claim Guide found:

• 61 percent said their home insurance premium has increased in the last 12 months.
• Nearly 1 in 4 (23 percent) have cut back on expenses to pay for rising premium costs.
• More than a fourth (27 percent) are currently struggling to find an affordable provider.
• 1 in 5 would live without homeowners insurance if it wasn’t required by their mortgage lender.
• 1 in 5 plan to switch providers in the next 12 months.
• On average, survey respondents reported paying $166.41 per month ($1,997 annually) for home insurance coverage.

Insurance companies that have increased their rates the most from 2022 to 2023 were Farmers Insurance (19.4 percent), Liberty Mutual (17.2 percent) and USAA (14.7 percent). Only two major carriers had single-digit increases, Chubb Ltd. at 6.9 percent and State Farm at 7.8 percent, according to the S&P analysis.

Some ways to reduce home insurance costs include bundling home and auto insurance; calling around for competitive quotes; and investing in weatherproofing

“Instead of sending the money to the insurer, you can use it to harden your home, and potentially get a lower premium in exchange for that,” Daryl Fairweather, chief economist at Redfin, told CBS News.