Claims News Service, Dec. 15, 9:42 a.m. EST -- A study recentlyreleased by the Insurance Research Council finds that the publicgreatly overestimates the profitability of the homeowners'insurance market.

According to the study, most Americans believe that homeowners'insurers earn an average of $33 in profit for every $100 receivedin premiums. In reality, from 1995 through 2004, insurers averagedan underwriting loss of $9 per year for every $100 received inpremiums.

Only recently has the market broken even or better. In 2003,insurers' profits equaled zero. In 2004, the homeowners' marketmoved into the black, with insurers earning between one and ninedollars in profit.

Perhaps unsurprisingly, people who experienced difficultyfinding appropriate or affordable homeowners' insurance gave thehighest -- and least accurate -- estimates. Nevertheless, the rangeof variation among all groups was narrow. Almost all subgroupaverages fell within a $30 to $35 range.

"The American public is extremely uninformed about theprofitability of homeowners' insurance," said Elizabeth A.Sprinkel, senior vice president of the IRC. "Despite years ofheadlines about homes being destroyed by natural catastrophes, thepublic underestimates the cost of claims by approximately half andgreatly overestimates profits. These unrealistic ideas may limittheir tolerance for homeowners' insurers' efforts to initiatechanges that might produce consistent profits."

More information is available at www.ircweb.org.