Homeowner's Rates Inadequate: Aon Study
NU Online News Service, Oct. 4, 10:15 a.m. EST?An insurance broker's study of the homeowners insurance market has found that recent rate and underwriting actions by the industry will fail to match its cost of capital.
The study's findings of the U.S. homeowner's marketplace was announced by Chicago-based insurance broker Aon Corporation and done by Aon Re Worldwide.
In a statement, Aon said that while personal lines cost of capital ranges from 11-to-13 percent, the homeowner's line cost were only returning 4.8 percent, despite the increases. The study was based on rate and underwriting actions filed through May and June of this year.
The study suggested that further rate increases or other underwriting actions may be needed by insurers to fully recover the cost of capital in the homeowner line.
Aon said this is the first such study done by Aon Re Worldwide. The company said it plans semi-annual updates of the study until the market stabilizes.
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