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Fire insurance premiums rise as loss ratio hits a six-year low
Direct premiums climbed to $23.2B in 2024, while the national loss ratio fell to 40.6%, signaling improved rate adequacy before the next wildfire risk reset.
America’s fire insurance market has rapidly expanded and repriced, with direct premiums rising 73.9% from 2019 to 2024, reaching $23.2 billion in 2024, according to Insurance Business. The outlet describes two phases, a hard market build from 2019 to 2023, followed by 2024 moderation in growth (+8.2% year-on-year) even as premium volume hit record levels.
A key read-through for the market’s underwriting economics is that the national loss ratio continued to fall, reaching 40.6% in 2024, the lowest level in the six-year window. Insurance Business frames this as a sign that, on a pre-LA-wildfire basis, pricing has become more adequate nationally.
The shift is tied to an increasingly costly catastrophe backdrop. Nine of the ten most expensive wildfires in US history have occurred since 2017, and the US recorded 28 billion-dollar weather and climate disasters in 2023, the highest annual count on record.
In California, non-renewals averaged more than 900,000 policies annually between 2020 and 2023, while replacement costs rose an average of 45% between 2020 and 2023 versus CPI inflation of 15%. Insurance Business adds that the state’s FAIR Plan grew from covering about 210,000 homes in 2020 to more than 463,000 by 2024, with total exposure above $450 billion, as carriers including The Hartford, State Farm, AIG, and Allstate stopped issuing new homeowners policies in the state.