US HOME INSURANCE COSTS RISING FASTER THAN INFLATION:

The average cost of claims per insured home in the United States has increased at a rate faster than inflation over the past 20 years, according to a new research brief released by the Insurance Research Council (IRC), an affiliate of The Institutes. The study, Homeowners Insurance Affordability: Countrywide Trends and State Comparisons, attributes the rise to multiple factors, including natural disasters, legal system abuse, fraud, escalating home repair expenses, and population shifts into disaster-prone areas. The report further reveals that homeowners’ insurance costs have risen disproportionately in comparison to household incomes, leading to record-low affordability. The IRC introduced an Affordability Index to measure the ratio of average homeowners’ insurance expenditures to median household income. In 2001, US households allocated 1.19% of their income toward homeowners’ insurance. That percentage climbed to 2.09% in 2022 and is projected to reach 2.4% by the end of 2024. The research brief identifies geographic variations in affordability. In 2022, Utah, Oregon, and Alaska ranked as the most affordable states, while Louisiana, Florida, Mississippi, Oklahoma, and Arkansas were the least affordable. Florida, despite remaining the second least affordable, experienced minor improvements compared to 2021. Affordability is driven by a range of state-specific cost factors, including claim frequency and severity, legal and fraud-related expenses, and exposure to environmental hazards such as hurricanes, wildfires, and hailstorms. ​