Direct US homeowners’ insurance is forecast to increase to $93 billion in premiums this year.

That is $2 billion higher than 2016, which in turn was $2 billion up on 2015.

Analysing the data, Aon Benfield said the industry was a “growth engine”, although it also cautioned that could change if approved rate increases did not match future loss and expense inflationary pressures faced by insurers.

In its annual Homeowners’ ROE Outlook report, the global reinsurance intermediary and capital adviser of Aon forecast continued growth in direct US homeowners’ insurance premiums this year despite a decreasing return on equity for insurers.

The study highlights that the top 20 US homeowners’ insurers secured an average countrywide rate increase of 3 per cent during the 18 months to August 2017, with the highest average rate increase of 7 per cent being achieved in Texas and North Carolina.

Florida insurers achieved an average rate increase of 5 per cent during the period, which will likely be insufficient to maintain their current return on equity levels given the increased costs facing the state’s carriers from benefits and claims adjustments, Aon Benfield said in a statement yesterday.

According to the report, prospective 2017 after-tax return on equity for US homeowners’ business was 4.5 per cent on a countrywide average, and 9.1 per cent excluding the state of Florida. The countrywide average last year was 6.7 per cent.

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.”

And Parr Schoolman, head of Aon Benfield’s Risk and Capital Strategy team, said: “Using advanced data and analytics, we are continuing to develop tools and services that provide clients with insight, at a granular level, into which homeowners’ risks are most likely to be profitable and are in alignment with their overall capital strategy.”