Home insurance claims dropped 19% — but your premium won’t reflect that until 2027
DS
Devon Sullivan
homeowners insurance rate hike · Apr 17, 2026
Source: DojiDoji Data Terminal
The national average homeowners insurance premium is projected to rise 4% in 2026, with increases already locked in across 45 states. That’s despite a 19% year-over-year drop in homeowners claims in 2025, which fell to 5.27 million — the lowest level in five years. The relief on claims hasn’t translated into relief on bills, and the reason lies in how insurance pricing lags reality.
The decline was driven largely by a quiet Atlantic hurricane season — no major hurricanes made landfall in the second half of 2025. That removed a major source of catastrophic loss. Personal auto claims also fell for a third straight year, landing at 31.6 million. Commercial property claims dropped from 910,000 in 2023 to 710,000 in 2025.
But the Los Angeles wildfires in January 2025 tell a different story. They generated over 7,800 smoke damage claims in the first month alone, and Verisk warns those claims can continue to emerge for years. The $41 billion in insured losses from the fires ranks among the most expensive events in U.S. insurance history.
The industry’s financial performance in 2025 was its strongest in a decade. Net underwriting gains reached $63 billion — nearly triple 2024’s $23 billion — on $971 billion in net written premiums. The combined ratio fell to 92.9%, meaning insurers spent $929 on claims and expenses for every $1,000 collected, keeping $71 as underwriting profit.
Yet none of this reverses the rate increases filed in 2023 and 2024, when the industry was losing money. State regulators approve rates on multi-year cycles, and those hikes are still flowing through 2026 renewal notices.
More importantly, the underlying risks haven’t changed. Wildfire exposure is expanding. Severe convective storms and coastal flooding remain persistent threats. Construction material costs are 40% above 2020 levels. New tariffs on Canadian lumber, steel, and aluminum are pushing rebuilding estimates higher — and those estimates directly shape dwelling coverage and premiums.
Reinsurance costs for catastrophe-prone areas remain high, driven by events like the LA wildfires. Those costs pass through to primary insurers and then to homeowners.
The market is not resetting in 2026. The structural forces that drove premiums up are still in place. Any benefit from lower claims volumes won’t appear in pricing until future filings reflect 2025’s results — likely not before 2027.
