How the Housing Market Affects Insurance


The housing market affects insurance in ways few people understand, as the two go hand-in-hand with each ebb and flow.  

In the past couple of years, many people have been asking, “why is homeowners insurance increasing so much?” Numerous factors influence the premiums of title insurance. The title agent, the age of the home, the loan amount, the geographic region, the home’s price, the history of the property, and the amount of extended coverage all play a role.

The Housing Market Impact

Another factor that is less obvious but directly linked to the growth of insurance premiums is the housing market.

Increase in Title Insurance

An October 2021 Best’s Market Segment Report states that direct premiums more than doubled in growth since 2019. Ultimately, it reflects the effects of housing market surging conditions despite the pandemic upheaval. Although they are beginning to uptick, interest rates have been at historic lows for the past couple of years. These factors combine with high consumer demand and shifts in demographics to encourage vigorous growth in the real estate market. Title insurance is currently the most profitable product in the P&C and E&O insurance markets.

What Makes a House High Risk for Insurance

Sometimes homeowners have difficulty securing insurance for their homes. Often it’s due to the home landing in the high-risk category. The following factors can contribute to a high-risk label for a home:

  1. Prior claims history: If the home or homeowner has a history of filing claims that may be high-risk, label assessed.
  2. High-risk area: If the home’s location typically experiences high crime or extreme weather (such as blizzards, tornadoes, or hurricanes), it may be high risk.
  3. Use of the home: A home that is not permanently occupied (like a vacation home) may be high risk due to susceptibility to break-ins or leaks that can be problematic if left undetected.
  4. Characteristics of the home, such as existing damage, historical significance, or structural concerns.

Steps to Take to Insure High-Risk Property

If your client is facing a high-risk situation with their home insurance, the following steps may assist them in obtaining coverage:

  1. Contact the state insurance department to investigate programs such as the Fair Access to Insurance Requirements (FAIR) plan, which the state department created to help insure areas along the coast that are potentially high risk.
  2. Advise them to speak with their neighbors. If their home is likely high risk, there is a chance there is a risk with their neighbor’s homes. The neighbors can share good advice.
  3. Invest in home improvements to correct deficits or counter the risks identified by the insurer (such as installing security systems or upgrading building materials).

Advise the clients to invest in the P&C and E&O Insurance markets. If that does not provide a solution. As an independent agent, you have the means to take your client in the correct direction and help them navigate the questions they might have. Additionally, translate the insurance lingo to help them better understand the options they have. It will make a difference in your client successfully adapting to the market fluctuation.

About Cochrane and Company

For more than six decades, Cochrane & Company has been proudly at the forefront of the insurance industry. Our experience has enabled us to innovate in powerful ways, reimagining the E&S market, and providing technology solutions that make it easy to do business with us. Licensed in all 50 states, we proudly serve clients across the nation, providing personalized and powerful solutions to help you become an even better partner for your clients. Speak to one of our experienced professionals today by messaging us or calling (509) 462-1148.


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