*

Rising losses from natural disasters see some insurers cut

cover

in catastrophe-hit states

*

Homeowner premiums have soared, 50% rise not uncommon,

broker

says

*

Lloyd's of London insurance market has stepped in, has

biggest

market share

By Carolyn Cohn and Noor Zainab Hussain

LONDON, Dec 16 (Reuters) - International and domestic

insurers are pushing into the U.S. market for hard-to-protect

homes, charging high premiums and enjoying strong profits after

some U.S. firms pulled out.

Rising losses from storms, hurricanes and wildfires in

recent years have caused some insurers, such as Allstate and

State Farm, to cut back cover in catastrophe-hit states like

Florida and California.

This has left greater room for non-domestic players like

Hiscox ( HCXLF ) and Munich Re to enter the fray,

industry sources say. Allstate did not respond to a request for

comment, while State Farm declined to comment.

According to a report this month from Swiss Re, 2024 will be

the fifth consecutive year that global insured losses from

natural catastrophes exceed $100 billion.

Recent large U.S. hurricanes Helene and Milton have added to

concern about property losses. However, the increasing

regularity of extreme weather events has stoked the market for

more expensive excess and surplus lines, or E&S.

Homeowners' premiums have risen by as much as 100% in the

past couple of years in areas such as Los Angeles and the

southeast of Florida, said Brian Bazan, a vice president at

broker Hub International.

It was not unusual for premiums to rise 50% when

policyholders transferred from the admitted market, though

increased competition was starting to bring those rate increases

down, he added.

Most properties in the United States are covered via

so-called admitted line insurance, where premium rates have to

satisfy the state insurance regulator.

But policyholders, typically when they have been refused by

three admitted line insurers, often buy E&S policies to gain the

cover they need.

This market has attracted players in the specialist Lloyd's

of London insurance market, which focuses on complex

risks.

"Where the market (terms and conditions) hardens, it has to

go outside of the States and Lloyd's is often the beneficiary,"

said Robert Greensted, a director at S&P Global.

"The potential for profitability is obviously there, but

there is additional risk."

Lloyd's had the biggest share of the overall E&S market in

2023. Recent growth in the E&S market has been driven by

property insurance premiums from catastrophe-prone states,

according to a report by ratings agency Fitch.

Tom King, flood line underwriter at Lloyd's insurer Hiscox ( HCXLF ),

said the firm's E&S flood product could provide higher levels of

rebuilding payments than conventional cover.

Munich Re was interested in growing its long-standing E&S

business, said Tom Wallace, chief underwriting officer for the

binding authorities business at Munich Re Specialty-North

America.

"The industry is seeing the first real dislocation on the

admitted front, particularly in California," he said.

States which have seen the biggest growth in E&S property

business since 2018 are those facing the most risk - California,

Florida and Louisiana, according to the U.S. Insurance

Information Institute.

U.S. E&S homeowner premiums are likely to exceed $3 billion

in 2024, up from $1.2 billion in 2018, according to reinsurance

broker Guy Carpenter. A rise in premium volume reflects both

increased demand and higher premium rates.

The overall combined ratio - a key measure of underwriting

profitability in which a level below 100% indicates a profit -

was 66% for property E&S business last year, sharply higher than

93% in 2022, the Fitch report said.

U.S. insurers are also present in this market - sometimes

the same ones that pulled out of admitted lines.

"The Lloyd's markets have always been here, but the U.S.

high net worth markets are now building out their own E&S

operations," said Hub International's Bazan.

"They are seeing more demand as they pull out of admitted

and backfill it with E&S. They can do what Lloyd's has always

done, which is crafting unique solutions."

Nationwide and AIG are among major U.S. insurers to offer

E&S as well as admitted property cover.

Nationwide did not respond to a request for comment, while

AIG declined to comment.

(Additional reporting by Pritam Biswas; Editing by Kirsten

Donovan)