Average approved homeowners rate increases in the US have fallen to 4.3% in the first half of 2026. The line is building on a US$16.5 billion underwriting gain in 2025, its first annual profit in six years, according to a new AM Best market segment report.
The slowdown in rate increases is steep. The average approved increase was 13.5% in 2024 and 7.6% in 2025. AM Best said filings for rate increases slowed in the second half of 2025, and that the trend continued through the first half of 2026, reflecting improved results across the line and a stabilizing reinsurance market.
Early 2026 results point the same way. AM Best put the direct incurred loss ratio for the first half of the year at 48.4, its lowest point in five years.
AM Best credited the turnaround to more sophisticated pricing, better catastrophe risk management and more consistent use of disciplined underwriting guidelines. Rate adequacy efforts produced double-digit growth in both direct and net premiums written in each year from 2022 through 2024. Combined with what AM Best described as a relatively benign catastrophe year, the larger premium base significantly improved the line's results in 2025.
That benign-year description comes with a caveat. 2025 opened with the Los Angeles wildfires, and AM Best's July industry review noted that net losses incurred fell 7.1% despite those losses.
"Insurers have consistently pushed for higher rates to address their calculated rate level needs, and overall, homeowners' insurers are doing a much better job of matching rate to risk, with greater dependence on recent loss trends than historical loss trends," said David Blades, associate director at AM Best.
Insurers have also used more precise data analytics and modeling to improve risk selection.
"Homeowners insurers have put resources into improving their underwriting, claim handling, loss control, and overall efficiency to produce improved bottom-line results," said Maurice Thomas, senior financial analyst at AM Best.
The report singles out Florida, where tort reforms passed in 2022 and 2023 have had a significant effect. In 2025, the state's loss and loss adjustment expense ratio and its combined ratio both fell sharply from each of the two previous years. Both ratios were well below the US average and the lowest of any of the top 10 states by a wide margin.
In California, AM Best said the improving environment is reflected in insurers' willingness to resume writing new business, after years of withdrawals and non-renewals.
For agents and brokers, the shift changes the renewal conversation. Clients who faced non-renewals, restricted coverage or double-digit increases over the past three years are now renewing in a market where rate filings are slowing, reinsurance costs are stabilizing and carriers are returning to previously restricted states. That makes this the point to remarket accounts actively rather than accept renewal terms at face value, particularly for clients in California and Florida.
