In its annual year-end trends and predictions report on the home insurance market, insurtech Matic found that the home insurance market showed signs of stabilizing in 2025 after several years of sharp rate increases.
Matic reported the average premium for a new policy rose 8.5% year over year, compared with an 18% increase in 2024, and said premiums are at record levels and equal to about 9% of a typical homeowner’s monthly mortgage payment.
Matic’s stabilization assessment aligns with some broader market forecasts that still point to near-term growth in premium volume. One 2025 issues brief cited in public reporting projected double-digit net written premium growth for the US homeowners segment in 2025, with overall profitability expected to return in 2026 as underwriting results improve.
“Carriers are back to rate adequacy, technology is helping them assess risk more accurately, and calmer weather in the latter half of the year gave the market a chance to steady,” said Ben Madick, CEO and co-founder of Matic.
He added, “Even so, homeowners are still facing very high costs, and climate-related uncertainty will continue to drive pricing and affect affordability in 2026.”
Matic said homeowners are taking on more of the financial burden through policy structure changes. The report said average deductibles rose 22% in 2025, and insurers are putting more weight on property-specific factors, including roof age, when evaluating risk.
The company said carriers are increasingly using tools such as AI-driven inspections, satellite imagery and drone assessments to evaluate homes and set prices based on current property conditions. Matic said these methods are being used to move underwriting away from assumptions and toward property-level data.
The report said pricing and availability continued to vary by geography, with Colorado, Texas and Georgia seeing steep premium increases tied to climate exposure and regulatory factors. Matic also reported that overall availability improved nationally, with the average number of quotes per person up 78% from the market’s low point in 2024.
High-risk areas continued to lean on the Excess & Surplus market, Matic said, pointing to California, Florida and Texas. The company reported E&S products accounted for 16% of Matic policies in those states by the end of 2025, up from less than 2% in 2023.
Matic said higher insurance costs are affecting the mortgage process by increasing borrowers’ debt-to-income ratios and delaying closings. The company said some borrowers are no longer qualifying when insurance premiums push monthly housing costs higher.
“Insurance is playing a much bigger role in housing outcomes than it did even a few years ago,” Madick said. “When premiums are high and options vary widely by location, having clarity on cost and coverage earlier in the process can make a meaningful difference for both borrowers and lenders.”
In its outlook for 2026, Matic said climate and catastrophe risk will remain a key driver of pricing and underwriting decisions, including exposure to severe convective storms, wildfires and flooding.
The company said affordability and availability issues are expected to persist as premiums remain elevated, especially in high-risk ZIP codes, alongside continued discussions about consumer protections and programs such as the National Flood Insurance Program.
Matic also expects broader AI adoption to change how consumers shop for coverage and how insurers assess property risk and adjust pricing. The company said it expects insurers to expand risk mitigation efforts, including investments in programs such as roof reinforcement and electrical system monitoring aimed at reducing future claims and loss severity.
