Insurers hike rates as extreme storms like Beryl proliferate, bringing forecasts for fatter profits
Destructive storms like Hurricane Beryl that knocked out power to 3 million homes and businesses in Texas are growing more frequent and intense, and insurers are jacking up rates in response
NEW YORK (AP) — Destructive storms like Hurricane Beryl that knocked out power to 3 million homes and businesses in Texas are growing more frequent and intense, and insurers are jacking up rates in response.
That could mean big profits for property and casualty insurers like Allstate and Progressive in the coming year. Investors have bid up shares in the sector roughly 19% so far this year, outpacing the S&P 500's 17% gain. Global insurance giant Swiss RE expects the broader sector's return on equity, a key measure of profit, to grow 9.5% in 2024, well above last year's 3.4% growth.
Rate hikes have been a way for property insurers to offset the cost of catastrophic events. Hurricanes account for most insured catastrophe losses, according to CFRA. Hurricane Ian in 2022 is a reminder of the risks facing insurers. It was among the costliest storms in U.S. history at just over $118 billion, according to NOAA. Hurricane Katrina in 2005 was the costliest at about $200 billion.
Effective rates for homeowner insurance surged by double digits for most insurance companies in 2023, according to S&P Global. Progressive's rates rose 10.4% in 2023, compared with just a 2.9% rise in 2022. Allstate's rates jumped 10.2%, up from 4.3% in 2022.
