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Your Home Insurance Premiums Keep Rising – Even Without Claims

May 6, 2025

Understanding Reinsurance: The Silent Factor Raising Your Premiums

If you’ve noticed your home insurance premiums increasing year after year, even if you haven’t filed a claim, you are not alone. One of the biggest factors behind these rising costs is something most policyholders have never heard of: reinsurance.

What Is Reinsurance?

Reinsurance is essentially insurance for insurance companies. It’s a system that helps insurers manage risk by transferring a portion of their potential financial losses to a larger, global reinsurance company. This allows insurers to remain financially stable when catastrophic claims, like those from hurricanes, wildfires, or floods occur.

Here’s how it works: When you buy a home insurance policy, your insurer takes on the responsibility of paying for any covered claims you might file. However, if too many large claims happen at once, like after a major natural disaster, the insurer could face financial strain. To prevent this, they purchase reinsurance, which kicks in to cover a portion of those claims once they exceed a certain threshold.

Why Reinsurance Affects Your Insurance Costs

Insurance companies don’t just factor in individual claim history when setting premiums—they also account for broader financial risks, including the cost of their own reinsurance. Over the past decade, the price of reinsurance has skyrocketed, doubling between 2018 and 2023.

This sharp increase is largely due to:

  • More frequent and severe natural disasters – Climate change has intensified hurricanes, wildfires, and floods, leading to higher claims payouts.
  • Population shifts into high-risk areas – More people are moving into disaster-prone regions, increasing insurers’ exposure to risk.
  • Economic factors – Rising inflation and the end of the low-interest-rate period have made capital more expensive, affecting reinsurance costs.

Since insurers must pay more for their own protection, they pass these costs down to policyholders through higher premiums. Research shows that reinsurance exposure accounts for nearly two-thirds of the increase in home insurance premiums.

The Hardest-Hit Areas

A recent study from National Bureau of Economic Research found that U.S. homeowners’ insurance premiums increased by 33% between 2020 and 2023, with the sharpest spikes in disaster-prone areas. Homeowners in coastal regions, tornado-prone states, and wildfire zones have seen the most significant premium hikes.

What Homeowners Can Expect

As climate risks continue to grow, so will the cost of reinsurance—and, in turn, home insurance premiums. While homeowners can take steps to mitigate risk (such as fortifying homes against disasters or shopping around for better rates), the overall trend points to rising costs. This issue is particularly challenging for lower-income households, which may struggle to afford necessary coverage.

The Bottom Line

Even if you’ve never filed a claim, your insurance premiums are likely rising due to factors beyond your control. Reinsurance is a key driver of these increases, as insurers adjust their pricing to cover growing risks from climate change, economic shifts, and catastrophic events. Understanding how reinsurance works can help homeowners make informed decisions about their coverage and prepare for future cost increases.  For more help navigating your unique needs, reach out to your Robertson Ryan Insurance Agent.

*Please note that we rely on independent sources, and recommend conducting further research or to seek guidance from a qualified industry professional, legal counsel, or licensed insurance agent as appropriate for your needs. These blog posts are intended for general informational purposes only.