Hurricane season arrives amid homeowners insurance hikes

As Hurricane Erin becomes the first hurricane of the 2025 season, homeowners in many parts of the U.S. are already facing double-digit insurance rate hikes, and insurers in some areas continue to pull out altogether.

In high-risk, catastrophe-prone regions, homeowners’ premiums are projected to rise more than 15% this year, according to Hub International’s 2025 outlook report.

The report notes that homeowner loss ratios have steadily increased, inching upwards from 75% in 2021 to 85% in 2023, with 2024’s hurricane activity expected to keep loss ratios elevated.

Capacity is tightening — particularly in regions like the Midwest — where some carriers are exiting markets instead of raising rates. Materials and labor costs are also contributing to rising claim severity, the report said.

Disaster-prone markets under strain

Catastrophe-prone areas are seeing some of the steepest increases, more than 10%, as carriers re-enter markets cautiously.

The biggest disruption may come from flood insurance, with FEMA flood zone changes expected to add new high-risk areas beyond 2025.

Wind coverage, which protects against hurricane and storm damage, is expected to rise around 20% in high-risk coastal areas, particularly near the Gulf of Mexico and the Atlantic.

The affordability crisis continues to shape the housing market. Hub’s report says the number of potential buyers backing out of the lending process before they close is at an all-time high, primarily due to financial strain.

In some cases, homeowners are skipping coverage entirely, with 8.5% of mortgage holders going without homeowners insurance because of high premiums. This leaves lenders exposed to losses from property damage and rebuilding challenges after disasters.

Extreme weather and rising costs

The frequency and severity of extreme weather events continue to drive premiums upward.

There were $62 billion in insured losses in the first half of 2024 which is roughly 70% above the 10-year average. Two-thirds of respondents said severe weather has already increased their premiums, with one in 10 reporting they are “not confident” they can afford to renew their policy.

The lack of flood coverage remains a major gap. In North Carolina, for example, only 1% of homeowners affected by Hurricane Helene had flood insurance, according to the report.

While some market stabilization is occurring, the report warns that volatility persists and is especially vulnerable to hurricane losses.

However, areas with lower weather risk may see slower rate growth or stabilization in 2025, the report said.

Broader economic and workplace impacts

Rising personal insurance premiums are also straining household budgets and affecting workplace productivity.

Hub’s survey found that 96% of U.S. companies believe employees’ financial wellness has been impacted “moderately” or “severely” by rising personal insurance costs.

Yet only a small share offer personal insurance options as a voluntary workplace benefit. Some industries feel the strain more acutely.

In real estate, only 10% of companies offer personal insurance solutions, even as up to 88% of new agents quit within five years, according to the report.

Nonprofits are more likely than most to offer coverage options — 38% do — but still face high turnover pressures.

Hub International’s full report can be found here.