American National Group, owned by Brookfield Asset Management Reinsurance Partners, will discontinue homes insurance in nine states due to deteriorating profitability, according to a company statement.
According to a business spokesman, the move is part of a strategy to reduce operations in Arkansas, California, Colorado, Louisiana, Minnesota, Oklahoma, South Carolina, South Dakota, and Washington.
American National said it is working with its agents to investigate solutions for clients in the affected areas.
“We have notified the appropriate insurance departments of our intent to withdraw from the homeowners business in nine states,” Scott Campbell, senior vice president, chief client experience, and corporate communications officer revealed. “Several years of increased frequency and severity of weather events have caused an increased lack of profitability in this line of business.”
He went on to say: “Inflationary pressures have also increased the cost of claims payments, which has compounded the lack of profitability.”
Homeowners insurance premiums have risen across the country, owing in part to unpredictable weather patterns, particularly in California, Texas, and Florida, resulting in an increase in customer claims that is harming businesses.
Several major insurance companies, including Allstate, Farmers, and State Farm, stopped offering homeowners insurance in specific states for identical reasons as American National. The rising cost of homeowners insurance is adding to the financial stress on the property market, which already has high prices and mortgage rates.
According to Ellen Carney, principal analyst at Forrester, customers’ premiums may climb this year as corporations seek to raise rates to offset rising costs.
“Climate adaptation, on the other hand, will become very real, as more insurers scale back activities in even more regions affected by climate change and explore new types of heat-linked policies,” she went on to say.
Last year, homeowners’ insurance rates increased by more than 21 percent, a trend that is expected to continue this year, according to Pat Howard, a qualified home insurance specialist at Policygenius.
“Homeowners can expect rates to continue to climb in 2024 due to severe weather conditions pushing many home insurance companies to raise premiums and become more selective in who they insure,” Howard wrote in a recent post.
“Wildfires out West, hurricanes in the South, and flooding in inland parts of the country have all contributed to home insurance companies pulling out of many states and raising premiums to counteract the outsized risk of homeowners filing claims,” he went on to say.