Homeowners in some states have seen premiums rise steeply, and others have had policies declined altogether, without ever making a claim. Property insurance is priced on expected future losses, and several inputs to that estimate have moved at once.
The cover is the cost to rebuild, not the market price
A policy insures the cost of reconstructing the house, which depends on materials, labour and the price of clearing a site.
Construction costs have risen across the country, so the sum an insurer might have to pay on the same house has grown even where nothing about the house has changed.
This is why premiums can rise in areas with no unusual exposure to disaster at all.
Catastrophe risk is modelled forward
Insurers estimate losses using models of wildfire, wind, hail and flood exposure that combine terrain, vegetation, building materials and historical events.
Because these models are updated as new data arrives, a neighbourhood's assessed risk can change sharply between renewals without any visible local change.
Pricing is set from the projection rather than the individual property's claims history, which is what makes it feel disconnected from personal experience.
Reinsurance costs pass straight through
Insurers buy their own cover from reinsurers to protect against a single event producing many claims simultaneously.
Reinsurance is priced globally and repriced frequently, so a series of large losses anywhere in the world raises the cost of protection everywhere.
That increase flows into the premiums of individual policies, because it is a direct cost of writing the business.
Rate regulation determines the response
Insurance in the United States is regulated at state level, and rate increases generally require approval from a state authority.
Where an insurer believes the approved rate does not cover expected losses, its available responses are to stop writing new policies, restrict cover, or exit the market.
Availability problems therefore tend to appear in the states where price movement is most constrained.
State-backed pools become the last resort
Many states operate a plan of last resort for owners who cannot obtain cover privately, funded through assessments on the insurers operating there.
These pools were designed for a small residual market, and their growth transfers risk toward policyholders generally when they expand.
Mitigation at the property level, including roof standards and defensible space around a structure, is increasingly the only variable an individual owner controls.