OREANDA-NEWS. October 17, 2017. Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc (NYSE:AON), today launches its annual Homeowners' ROE Outlook report, which forecasts continued growth in direct US homeowners' insurance premiums for 2017 despite a decreasing return on equity for insurers.

The report reveals that US homeowners' premiums increased from USD89 billion in 2015, to USD91 billion in 2016, and are expected to reach USD93 billion in 2017.

The study highlights that the top 20 US homeowners' insurers secured an average countrywide rate increase of three percent during the 18 months to August 2017, with the highest average rate increase of seven percent being achieved in the states of Texas and North Carolina.

Meanwhile, Florida insurers achieved an average rate increase of five percent during the period, which will likely be insufficient to maintain their current ROE levels given the increased costs facing the state's carriers from benefits and claims adjustments.

According to the report, prospective 2017 after-tax return-on-equity (ROE) for US homeowners' business was 4.5 percent on a countrywide average (2016: 6.7 percent), and 9.1 percent excluding the state of Florida.

Challenges to the ROE projections include a slowdown in insurers' rate increases against a backdrop of loss and expense inflation, and an increased A.M. Best capital charge resulting from insurers' premium and exposure growth – which is currently being offset by reduced reinsurance costs.

Greg Heerde, Head of Americas Analytics for Aon Benfield, said: "Given the year-on-year increase in premiums, US homeowners' insurance can be considered a growth engine within the industry. However, we continue to monitor this line business carefully, as it is difficult to say at this stage whether insurers' approved rate increases will be sufficient to match their loss and expense inflationary pressures of the future."