US homeowners insurance rates surge in Q1, wildfire impacts a likely driver: MarketScout
Homeowners insurance rates in the United States surged in the first-quarter of 2025, with the lingering impact of the recent California wildfires one likely driver, according to MarketScout.
Readers will be aware that insurance rates for catastrophe exposed properties have been one area of both commercial and personal insurance markets that have seen steadily increasing rates across the United States in recent years.
MarketScout’s latest quarterly data on the US insurance market shows that increases continue and the effects of the wildfires may have driven a larger rate increase in the recent quarter.
“Personal insurance rates in the United States continued their upward trend in the first quarter of 2025, with the composite rate increasing to 4.9%, up from 4.0% in Q4 2024, according to the latest market data,” the company explained.
Adding that, “Homeowners insurance led the surge, particularly for high-value properties. Policies for homes valued over $1 million rose by 7.3%, while those under $1 million increased by 4%, up from 3.3% in the previous quarter.”
Richard Kerr, CEO of Novatae Risk Group, of which MarketScout is a division, commented, “Homeowners insurance saw notable increases in Q1 — likely due to the lingering impact of recent California wildfires.
“It often takes time for the market to respond to catastrophic events. Rates are now trending upward and could rise further as we head into hurricane season.”
In addition, another area of personal insurance lines that may have been influenced by the costly wildfire losses to high-value homes, is in personal articles and fine art.
Here, MarketScout noted that rates rose from 2.3% to 4.3% over the first-quarter of 2025.
For commercial insurance, MarketScout’s composite rate upward trend continued in the first quarter of 2025, with the increasing to 3% across all lines.
Commercial property insurance rates in the United States were up 3.6% in Q1 2025, with business interruption rising by the same percentage.
That’s a slight rate acceleration from Q4 2024, when US commercial property rates increased by 3.3%.
It’s interesting to note though, that at the end of 2024 MarketScout highlighted that catastrophe exposed property insurance rates had decelerated their pace of increase over the year.
Abundant capacity had been one driver, as too had more accommodating reinsurance pricing and terms in 2024.
It’s possible that trend may have been halted by the effects of the wildfire losses and now it will be interesting to see how the convective storm and 2025 Atlantic hurricane season play out and influence the trajectory of rates going forwards.
While reinsurance pricing trends have been a driver of primary rates in the US for property risks, especially catastrophe exposed in recent years, it may be telling that rates have accelerated somewhat after the meaningful loss from the wildfires and could suggest that, despite the well-capitalised market, it might not take too large a loss burden for current trends to change.
