MALVERN, PA — A new report from the Insurance Research Council shows that homeowners’ insurers are waiting significantly longer for state approval of rate filings, a trend that has widened the gap between requested and approved rate changes and contributed to ongoing underwriting losses across the industry.
The study, Rate Regulation in Homeowners Insurance: Comparison of State Systems, tracks approval timelines and market outcomes from 2010 to 2024. It finds that the average number of days from filing to approval has climbed more than 40% over that period, with sharp differences among states. California posted the longest wait time in 2024 at 321 days—twice its 2018 average.
IRC President Pat Schmid said long approval cycles are preventing insurers from adjusting premiums quickly enough to match claims costs, inflation, and escalating weather-related losses. “When rates don’t keep pace with claims costs and inflation, the result is mounting underwriting losses,” he said.
The report highlights several key industry pressures:
- Slower approvals: The share of filings receiving less than the requested rate increase has risen more than 10 percentage points since 2010.
- Persistent underwriting losses: Homeowners combined ratios exceeded 100 in 10 of the past 15 years, underscoring long-term profitability challenges.
- Market shifts: Residual market participation grew from 2.4% in 2019 to 3.9% in 2024, while the E&S market expanded as carriers pulled back in heavily regulated states.
- Increasing competition: Market concentration, measured by the Herfindahl-Hirschman Index, fell 14.6% as new entrants and alternative carriers gained ground.
IRC Vice President Vickie Kilgore said the findings underscore the need for regulatory systems that balance consumer protections with the operational realities facing insurers. She noted that today’s environment of rising climate risk and higher claims severity requires “more efficient regulatory processes to sustain a stable market.”
The report evaluates more than a decade of rate filing activity using data from NAIC Property and Casualty Industry Rate Filings, sourced from S&P Global Market Intelligence. It compares outcomes across all 50 states and the District of Columbia, contrasting results in Prior Approval systems with other regulatory models.
The full study is available at Insurance-Research.org.
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