U.S. homeowners insurers posted an underwriting gain of $16.5 billion in 2025, avoiding an annual loss for the first time in six years, AM Best said in a market segment report released September 28. The insurance rating agency titled the report around the “markedly improved” results for the line.
Underwriting results measure premiums collected against claims and expenses paid, before investment income. A gain means the industry took in more in premiums than it paid out for the policies themselves, something the industry had not managed in a full year for six years, according to AM Best’s report.
Rate increases are slowing, not reversing
The same report tracks how much insurers asked homeowners to pay. The average approved rate increase was 13.5% in 2024 and 7.6% in 2025, AM Best said, and through the first half of 2026 it dropped to 4.3%.
Each of those numbers is still an increase. An average approved increase of 4.3% means premiums are still rising for the typical policy, only at a slower pace than during the sharpest part of the cycle. Households that saw a double-digit jump at renewal two years ago may see a smaller one now, but the report does not describe prices falling.
The drop is steep for a short span. Going from 13.5% in 2024 to 4.3% in the first half of 2026 is a fall of 9.2 percentage points, with the 2025 average of 7.6% landing between the two.
The question for a homeowner living on a fixed income is what the industry’s profit turnaround means for the next renewal notice, and whether a slower pace of increases changes anything about when to shop around or how much coverage to carry.
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What drove the turnaround
AM Best also put the broader property/casualty industry’s direct incurred loss ratio at 48.4 in the first half of 2026, the lowest in five years. A lower loss ratio means less of each premium dollar went to claims.
Several factors came together, according to trade coverage of the report. Maurice Thomas, an analyst quoted by Insurance Business, said that homeowners insurers “have put resources into improving their underwriting, claim handling, loss control, and overall efficiency.” The report also credits a benign catastrophe year and Florida’s tort reform.
The catastrophe point matters most for homeowners. A quiet storm and wildfire year keeps claims down, and one severe season can erase the gain. Underwriting profit in one year does not guarantee the same result the next, and the industry’s rate requests tend to follow its loss experience with a delay.
The rate figures show the lag in action. Approved increases of 13.5% in 2024 came while insurers were still losing money on the line, and the 4.3% average in the first half of 2026 arrived after the profitable year. Regulators approve rates on filed loss data, so the price a policyholder pays tends to trail the claims picture by a year or more.
The outlook was already improving
AM Best had signaled the shift before the new report. In December 2025 it revised its outlook on the U.S. homeowners insurance segment to stable from negative. A stable outlook means the rating agency does not expect the segment’s financial strength to weaken in the near term.
The December 1 revision came about ten months before the September 28 report. The $16.5 billion gain covers calendar 2025, while the 4.3% rate figure covers only the first six months of 2026, so the two numbers measure different periods.
For policyholders, the improvement in insurer finances is a different matter from what any one household pays. Premiums depend on the state, the insurer’s filed rates, the age and condition of the roof, the claims history and the local catastrophe risk, and those details vary far more than the industry average does.
Reviewing a homeowners policy at renewal
The renewal notice is the place to start. It shows the new premium, the dollar change from last year and any change to the deductible or to the coverage limits. A homeowner can compare those against the prior declarations page, and ask the agent which discounts apply, such as for a newer roof, a monitored alarm or bundling with an auto policy.
Getting quotes from two or three other insurers is the usual way to test whether the renewal price is competitive, and the state insurance department’s website generally publishes consumer guides and complaint data for companies licensed there. When comparing, the same coverage limits and deductible need to be on every quote, or the prices do not line up.
The figures on the industry’s profit and on average approved rate increases come from AM Best’s September 28 report, and the agency’s next segment update will show whether the slower pace of increases continues through the rest of 2026.
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This article was produced with AI assistance and reviewed by The Financial Wire’s editorial team.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
