InsurTech Ohio Spotlight with Andrew Hellard

Andrew Hellard is the VP of Product at Matic, a leading digital insurance marketplace of 40+ A-rated home & auto carriers. Andrew was interviewed by Andrew Daniels, Co-Founder and President at CrashBay and Founder and Managing Director at InsurTech Ohio.

Andrew, what’s happening in today’s home insurance market, and what’s driving these trends?

“The last two-and-a-half years have been difficult for the home insurance market. Premiums have surged to record levels, while carriers have tightened restrictions and even withdrawn from some regions, leading to a decrease in coverage availability. We’ve seen several factors fueling this shift. A combination of severe weather losses and unexpectedly high inflation has hit insurer profitability hard. For example, State Farm, which is the largest home and auto insurer in the U.S., reported a $14 billion underwriting loss in 2023, with $5 billion of that from property insurance alone. If you think about it, a property insurer's core business is repairing and rebuilding homes. If inflation catches them off guard and they set their premiums too low, they’re locked into those prices for the entire term of the homeowner's policy.

Compounding the issue, insurers often have to go through state regulators to adjust prices, which takes time. This means it’s taken several years in some cases for insurers to gain approval on the rate increases needed to offset inflation and weather-related losses. California is a prime example of this problem. Previously, the California Department of Insurance (DOI) did not let insurers use forward-looking loss projections to set rates, which became a big problem as weather patterns were changing. If you can only look backward, then you can't account for what you think will happen in the next 12 months. This led to many insurers implementing restrictions, with at least seven large carriers in California exiting or limiting new business. Fortunately, the DOI has recognized this and is starting to collaborate with carriers to address the issue.

In addition to California, other states, including Florida and Texas, have had a particularly tough time with insurance over the last few years. In Florida, hurricanes and a challenging regulatory environment around lawsuits have been major issues, but recent reforms are helping to stabilize the market. In Texas, the challenge is more about severe weather events — hurricanes on the Gulf Coast, hailstorms in the Dallas-Fort Worth area and wildfires in the west have all taken a toll on insurer profitability, impacting both the cost and availability of coverage."

Where do you see the market heading in the short term?

"Although we’re not out of the woods yet, there are some positive signs. Companies like Progressive and Geico took steps to raise rates early on, and they’ve seen profitable quarters as a result. Rate hikes might not seem great, but they’re important because they help insurers manage the rising costs from weather and inflation. This means they can keep offering coverage and expand into more areas, which is an encouraging signal for where the market is headed. That said, most of the profitability has been on the auto side — home insurance remains a challenge.

At Matic, we’ve seen double-digit premium increases across almost all carriers over the past two years, but these increases may begin to level off soon as inflation stabilizes. In recent years, we've also seen carriers retreat entirely from high-risk regions like the Mountain West, Florida, California and the Gulf Coast of Texas. Thankfully, the wave of market exits has slowed, and we're starting to see some carriers re-enter these areas. Additionally, the challenges with home insurance are starting to capture the attention of federal and state regulators. As concerns about affordability and access grow, efforts to address these issues through policy reform are gaining momentum — though we haven’t seen a huge impact just yet. ”

What's the long-term outlook for the property insurance market, and will it look like in five years?

“It’s difficult to predict what’s going to happen within the next five years. The market is driven by two main factors: carrier finances and weather losses. The biggest uncertainty is weather. Over the past several years, traditional models that were used to predict loss frequency and severity have become less reliable, since weather patterns have changed. Insurers need a few years to recalibrate their models for the ‘new normal.’ Until they can make those adjustments, returning their pricing to a profitable level will be challenging.

In states where regulators are more flexible with rate changes, we’re seeing higher prices but also better insurance availability. On the opposite side, states like California, where regulators have attempted to moderate rate increases, have struggled with insurance availability. However, we’re starting to see some compromise between regulators and insurers. It’s clear that both parties need to work together to ensure carriers can stay in business. Regulators are still focused on protecting property owners, but they’re realizing that getting the regulatory and pricing balance right is key to ensure carriers can operate. If that doesn’t happen, insurers might withdraw from a state entirely, and once they do, they usually can’t come back for 18 to 24 months.”

What advantages do companies in the technology space have in navigating current market dynamics?

"For consumers, the best strategy is to regularly shop for insurance. We’ve seen that some insurers raise prices more in states where they can, to make up for the inability to raise rates in places where they can’t. If you’ve been with the same insurer for a while, it’s worth seeing what else is out there to avoid paying more than you should. Handling this on your own can be tough, especially given the time it takes to gather quotes and identify which insurers are active in your state or your specific zip code.

Working with an independent agency is a smart move because they often have access to a range of products and options that aren’t widely available to the public. At Matic, we’re tackling these market challenges through technology and have built a comprehensive network of carriers to address coverage gaps across states. It’s our people and our tech that have enabled us to succeed in this difficult market."