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Homeowners rates recap, H1'16

The group led byState Farm Mutual Automobile InsuranceCo., which ranked as the nation's largest homeowners insurer at the group level in 2015 basedon U.S. direct premiums written, received approval for some noteworthy rate decreasesin that business line during the first half of 2016.

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Regulators approvednine of the 10 most impactful rate decreases by calculated premium change for StateFarm policies between Jan. 1 and June 30. StateFarm Lloyds received approval for an average rate cut of 6% in Texasthat will result in a calculated premium decrease of $113.4 million, according toSNL data. Of the top 10 decreases, StateFarm Fire & Casualty Co. saw average rate reductions ranging from3% to 6% in eight states, which did not include Texas.

Several factors,including the characteristics and location of the insured property, determine ratechanges for individual customers, State Farm spokesman Jim Camoriano toldS&P Global Market Intelligence in an email. State Farm reviews loss trends overa period of years when determining homeowners rates. The rates are based on theexpected need to pay future claims informed by actual claims experience in an area,from weather, hail, wind, water, fire, accidents, liability, theft, and so on, Camoriano said.

The RateWatch application of S&PGlobal Market Intelligence's RateFilings.com indicates that the extent of State Farm's rate reductions in 2016 was significant compared to what ithas implemented in previous years. State Farm reduced rates in 30 states in additionto the District of Columbia in 2016, based on business effective dates, accordingto RateWatch statistics, compared to a total of 11 rate cuts in the previous fiveyears combined. Rate decreases sought in 2016 range between 1% and 6.50%.

The State Farm group last pursued rate decreases in the homeownersline in such a broad-based manner from a geographic perspective in 2007, to a review of archivedrate filing data. The group's U.S. direct premiums written in the homeowners linedecreased by 0.4% in 2008, the only time in the past 19 years in which its directpremiums written in the U.S. homeowners market did not grow on a year-over-yearbasis.

, part of , saw rates declineby an average of 12.6%in California, as agreedwith state Insurance Commissioner Dave Jones. Allstate Insurance returned to California after a nine-year absence writing newhomeowners policies, and the rate cut would result in a $67.3 million premium decrease.

In terms of increases,six of the 10 most impactful homeowners rate increases in the first half of 2016were approved in Texas, including two for Allstate companies and two for membersof the Liberty Mutual group. The most significant rate hike in terms of calculatedpremium change was reported by , a memberof Farmers Insurance Group of Cos.,which received approval to increase rates by 7.10% in Texas that would result ina calculated premium increase of $46.7 million.

received approval for a 15% rate hike in Colorado, the highest increase in U.S.homeowners insurance rates by approved rate change in the first halfof 2016. Other notable increases include a 10% rate hike for MetLife Inc.'s MetropolitanLloyds Insurance Co. of Texas, a 9.90% rate increase for each of LibertyMutual's Safeco Insurance Co. of Indianaand Liberty Insurance Corp.,and a 9.10% rate increase for Erie Insurance Group's Erie Insurance Exchange.

Texas reported thehighest overall increase in homeowners rates during the first half of 2016 in termsof calculated premium change, followed by Georgia. In terms of average rate increases, Montana received approvalfor the highest rate increase of 6.30%, followed by Maryland at 6.25%. 

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SNL offers a variety of tools to analyze the rate and product filings of insurance companies. Click here to find out more about the Insurance Rate & Product Filing subscription.

Click here for a template providing rate changes for a selected entity, state or type of insurance over a selected time period using interpretive charts and histogram. With this template, one can also view information on each filing along with key metrics related to premiums, approval time and affected policyholders.

Click here for a webinar with information on the resources SNL has available regarding rate filings.