Catastrophes, competition and regulation will continue weighing on the industry.
New York, NY (PRWEB) November 07, 2014
Demand for homeowners' insurance is generally resistant to economic fluctuations because it is considered essential in providing financial protection against the inherent risks of homeownership. However, the industry's supply of homeowners' insurance and underwriting results vary significantly by geographic region due to differences in local claims costs, profitability and competitive market conditions. While industry revenue is fairly stable and follows growth in the number of households, industry profitability is highly volatile due to the potential for catastrophic losses arising from natural disasters.
Over the past five years, Homeowners' Insurance industry revenue, which is comprised of premiums and investment income, is expected to grow. According to IBISWorld Industry Analyst Leah Goddard, “While industry revenue has slowly recovered from the subprime mortgage crisis, industry operators struggled to deal with weakened demand and limited new business from a depressed housing market over the past five years.” However, home insurers have raised premium rates in response to catastrophic losses in recent years, which has helped bolster revenue. In addition, rising stock market values have increased investment income, further driving industry growth. “Despite higher claims costs resulting from record losses over the period, higher premium rates and investment income offset underwriting losses, allowing industry operators to maintain profitability,” says Goddard.
Home insurers will have to adapt to an increasingly difficult operating environment over the next five years. From 2014 to 2019, IBISWorld forecasts that industry revenue will rise modestly. Premium growth will be underpinned by rate increases and improvements in underlying housing market conditions, while investment income will also grow due to rising stock market values and interest rates. However, climate change will continue to increase the frequency and severity of natural disasters and, therefore, losses for industry operators, hurting profitability and underwriting capacity. High competition and increased regulation will also weigh on profit margins over the period.
For more information, visit IBISWorld’s Homeowners’ Insurance in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes insurers that underwrite (e.g. assume and manage risk) homeowners' insurance policies. Homeowners' insurance protects households against property damage or losses due to catastrophic disasters, theft and other causes. These policies also protect against personal liability that may arise from bodily injury that occurs on one's property.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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