Professor: Hurricane Helene, inflation and growth drove Georgia homeowners insurers to large underwriting losses

Professor Peter Hartwig, an insurance scholar from the University of South Carolina, told the Georgia House Insurance Rate Study Committee in Savannah that Georgia’s homeowners insurance market has moved from thin profits to large underwriting losses in recent years, driven primarily by catastrophe losses, inflation in building costs and demographic growth.

Hartwig told the committee that Georgia’s homeowners combined ratio — the standard industry measure of claims and underwriting expenses divided by earned premium — rose to about 144.9 in 2024, meaning insurers paid about $145 in losses and expenses for every $100 of premium earned. “For every $100 the insurers earned in premium they paid out about $145,” Hartwig said. He said the state’s five‑ to six‑year combined‑ratio average also has been elevated and that Georgia has persistently underperformed the U.S. average on homeowners returns on equity.

Why it matters: higher combined ratios indicate insurers are losing money on underwriting and must either raise rates, reduce coverage, limit new business or rely on investment income and reinsurance markets to remain solvent. Hartwig said that combination of factors has already driven substantial premium increases and that 2024’s experience — led in part by hurricane Helene — will likely depress returns further in the short term.

Key facts and figures presented

- Hartwig said Georgia’s 2024 homeowners combined ratio was roughly 144.9, compared with a U.S. homeowners combined ratio near the mid‑90s for the same year. He traced the spike primarily to insured catastrophe losses tied to Helene. - Insurers paid about $3.0 billion in insured losses in Georgia from Helene as of late August reporting, with approximately 170,000 claims either paid or outstanding, Hartwig said. - Across the nation, Hartwig said average insured catastrophe losses have jumped markedly this decade; he cited a roughly $89.4 billion average annual insured loss for 2020–2024 globally (statistical sources: NAIC and industry reinsurance reports cited in his talk). - Construction‑related inflation amplified claim severities: Hartwig noted residential construction materials and trade service costs rose far faster than headline CPI since 2020 — in some categories by 40–45% — increasing replacement costs for roofs, siding and structural components.

Drivers Hartwig highlighted

- Catastrophe frequency/severity: inland tornadoes, severe convective storms, and inland impacts of hurricanes like Helene raised losses. - Demographics and exposure: Georgia’s above‑average population growth and a large number of new housing units increase the amount of property exposed to storms. - Post‑pandemic supply and price shocks: materials and labor costs rose sharply and were not embedded in prior rate levels, forcing insurers to “catch up.” - Reinsurance and capital: reinsurer pricing and insurer capital positions tightened rates and underwriting discipline after 2022–2023 losses; Hartwig said some reinsurance price indices have declined recently but that capital constraints affected insurer behavior in 2022–2024.

What Hartwig and witnesses said about rates and cross‑state subsidies

Hartwig told the committee that rates should be set on the basis of a state’s own experience and cautioned against using profitability in other states as a basis to reduce rates in Georgia. “Rates in Georgia are based on the experience here in Georgia,” he said, adding that using profits from other states to subsidize Georgia would violate rate‑making principles and create perverse incentives.

Committee context and next steps

Hartwig and committee members discussed mitigation and building‑code measures as tools to reduce future insured losses; he said mitigation and stronger building codes can reduce losses and that policymakers should examine both regulatory clarity and incentives to attract capital to the market. The committee recorded Hartwig’s PowerPoint for the public record and asked the Department of Insurance to follow up with constituent services contacts for claims assistance.

Ending

Hartwig urged a mix of short‑term regulatory clarity and long‑term mitigation investment to stabilize market conditions. He said homeowners’ premium relief is tied to both actuarial results and the pace of loss mitigation and structural adaptation.