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Homeowners’ premium maintains US growth spurt

US homeowners’ premium is expected to hit $US93 billion ($119 billion) this year as the line continues to grow amid increasing pressure on insurers’ financial returns, according to an Aon Benfield report.

Premium was $US91 billion ($116 billion) last year and $US89 billion ($113 billion) in 2015.

The top 20 US homeowners’ insurers secured an average nationwide rate rise of 3% in the 18 months to August, with the highest average rise of 7% achieved in Texas and North Carolina.

“Given the… increase in premiums, US homeowners’ insurance can be considered a growth engine within the industry,” Aon Benfield Head of Americas Analytics Greg Heerde said.

Challenges include a slowdown in rate rises against a more difficult business backdrop.

“It is difficult to say at this stage whether insurers’ approved rate increases will be sufficient to match their loss and expense inflationary pressures of the future,” Mr Heerde said.

Return on equity (ROE) for homeowners’ insurance is expected to fall to 4.5% this year from 6.7% last year. Excluding Florida, ROE would improve to 9.1%. Aon Benfield says there are at least three different homeowners markets in the US, with Florida “a market unto itself”, dominated by carriers with limited name recognition outside the state.

The hurricane-exposed coast, excluding Florida, has an estimated 6.7% ROE, with states characterised by heavy regulation, strong competition and sophisticated risk differentiation based on granular, catastrophe-savvy rating plans.

“The remainder of the US owns a respectable 12.2% ROE, with market share largely dominated by big-name national and super-regional brands,” the report says.