Insurance has come a long way since the first policy was written in the 1730s. In those days, policies were mainly vested in fire protection, and it wasn't until more than 100 years later, in the 1830s, when state governments became involved, collecting premium taxes and keeping capital reserves.
The first modern homeowners' multiperil policy wasn't created until 1950, and since then, the industry began to employ a more high-touch underwriting process, using agents, specialized underwriters and property inspectors to understand and quantify risk. Very little aggregated data regarding risk indicators was often unavailable, and early homeowners' rating plans were very simple.
Today, the insurance industry is driven by data and predictive analytics, as insurers file multithousand-page rate plans with thousands of pricing tiers, using dozens of rating variables. As insurers mitigate profitability challenges, competition increases and data has become more available. As we move forward, we can expect to see homeowners' insurance following auto's historical trend of price and underwriting sophistication.
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