Issue 17 Includes:

• Think Piece: Michael J. Marshall and Gerald Flood on what a decade of data says about the homeowners insurance run-up — where premiums rose fastest, why the increases were a repricing rather than a windfall, and what's changed heading into 2026.
• Three Questions: Dror Oppenheimer on FHA's proposed Reinstatement Advance Payment (RAP) demonstration — how it restructures partial claims, what it means for servicers, and why the comment period matters.
• Inside Voices: HUD's note sale strategy, the ROAD Act's small-dollar mortgage pilot, a $15.5 million force-placed insurance settlement, a widening new-vs-existing home price gap, and Fannie Mae's latest executive shake-up.
• Gate House Index: rising homeowners insurance premiums — how much they rose and what were the drivers; FHA's growing partial claims and potential RAP benefits.

THINK PIECE

A Closer Look at Homeowners Insurance Premiums, 2011–2026: What’s Happened, Where, and What’s Been Driving It?

by Michael J. Marshall, Founding Partner, and Gerald Flood, Senior Consultant, Gate House Strategies

Marshall is a Founding Partner of Gate House Strategies. Prior to Gate House, he served in leadership roles at HUD, including Acting Assistant Secretary for Policy Development and Research (PD&R), Chief of Staff to the Deputy Secretary, and Senior Advisor at FHA.

Flood is a Senior Consultant with Gate House Strategies, bringing extensive mortgage industry experience in strategic planning, business development, and market research. He previously served as a Director at Fannie Mae, leading corporate strategic planning and competitive and industry analysis.

Homeowners insurance, once a line item in escrow analysis, has grown into a significant financial obstacle for homebuyers and even existing homeowners who are increasingly stretched by rising premiums and general post-COVID inflation. Much of the commentary about this recurring topic, however, has been either anecdote or advocacy, providing an interesting narrative but rarely a full picture. We thought it useful, therefore, to examine what the publicly available data is telling us about this story: How much have premiums risen and where, and what has driven the increase to date.

Breaking it down

The National Association of Insurance Commissioners (NAIC) reported that the average premium for a standard homeowners insurance policy (HO-3) rose from $978 to $1,737 between 2011 and 2023, a 78 percent increase, compared to a 36 percent rise in the Consumer Price Index (CPI) over that same period.

What’s notable is that through 2022 the BLS producer price index for homeowners insurance, which tracks the rate for a fixed policy, rose less than CPI while coverage amounts rose with home values, which doubled. In other words, much of the growth in average premiums was due to an increase in coverage attributable to rising home values, not homeowners insurance rates. The index does not reflect changes in average policy terms over the period, so it somewhat understates the effective rate change. Half of the gap with the CPI reflected in the NAIC 2011–2023 data occurred in the last two years of that period. The rate increases themselves outran inflation only from 2023 through 2025, 27 percent vs. 9 percent for CPI. As discussed below, this has been a catch-up to the increase in claims paid, a lag built into a business in which rates are set in advance and approved by regulators. Premium rate increases appear to have slowed after 2024. Regulator-approved rate changes averaged roughly 13 percent a year in 2023 and 2024, then 6.3 percent in 2025 and 1.8 percent in the first seven months of 2026, below inflation. Freddie Mac's escrow records show the same pattern from the borrower's side.

Chart 1A and 1B: Homeowners Insurance Premiums and Benchmarks

Insurers, meanwhile, did not capture the premium increases as excess returns. The NAIC's profitability report shows a full cycle: From 2017 to 2023 claims took 69 cents of the premium dollar, the homeowners line lost money on underwriting in six of the seven years, and its return on capital averaged 2 percent vs. 6.5 percent for all property-casualty (P&C) lines.

The 2024 catch-up brought the return to 13.9 percent, the same as the overall P&C industry that year, but the homeowners line net of reinsurance still ran a small operating loss. Over the full decade, homeowners returned 5.2 percent vs. 7.3 percent for the P&C industry. The policyholders of 2023 to 2025 paid for the shortfall of 2017 to 2023, but the increases through 2024 were a recovery to par, not a windfall. Because insurers hold no pre-funded catastrophe reserves, a bad year is absorbed first by capital and reinsurance and then, a year or two later, by policyholders. Early 2025 data point past par: the best combined ratio (claims plus expenses as a share of premium) in more than a decade at 88, on a light second-half catastrophe season. One good year after seven bad ones is the cycle working, and the smaller rate increases approved in 2025 and 2026 are the market's response.

Regional differences

The burden of premium increases has not been uniform across the country. A recent GAO study, using First Street Technology premium estimates for 2019 to 2024, found that the national average premium rose only 3 percent after inflation while parts of southern coastal states rose 25 percent or more, and coastal North Carolina and Texas more than 50 percent. Over the longer period since 2011, the five largest percentage increases in the NAIC data have been in interior states (Colorado, Wyoming, South Dakota, Nebraska and Idaho), not in coastal states. (Again, a substantial part of every state's increase is coverage growth, so the ranking is by premium, not by homeowners insurance rate: Colorado's average premium went from $961 to $2,492 while its home values rose 147 percent.)

Chart 2A and 2B: Change in Average Homeowners Insurance Premium by State, 2011–2023, in Percent and Dollars

Over the decade through 2024, based on the NAIC's state allocations of insurers' capital, insurers lost the most money in six hail belt states (Iowa, Nebraska, Colorado, Minnesota, Arkansas and South Dakota) and in Louisiana. In other words, insurers underpriced the risk in hail states in 2011 and have been repricing unevenly. Six of the seven are file-and-use states, and Iowa's prior-approval law allows the regulator only 30 days to object, so the underpricing belongs to the industry.

Chart 3: Return on Net Worth by State, Homeowners Multiple Peril, 2015–2024

The coastal states tell different stories. Louisiana's losses were from hurricanes: loss ratios of 250 and 411 percent in 2020 and 2021, twelve insolvencies among thinly capitalized domestic carriers, whose unpaid claims ultimately fell to other policyholders, and now the country's highest average premium. Florida's driver was litigation: the state generated 64 to 80 percent of the nation's homeowners lawsuits from 2016 to 2024 with about a tenth of the claims. After the 2022 and 2023 reforms (which ended one-way attorney fees and prohibited assignment of benefits on new policies) Florida’s share of suits fell to 41 percent, its insurers posted their best results in a decade, and the state-run Citizens insurer shrank from 1.2 million policies to 0.3 million. Texas and North Carolina were profitable. California's average premium is below the national figure. Its problem is availability, as insurers have paused new business and nonrenewed policies in wildfire areas under the rate-regulation structure discussed below.

Rebuilding costs and exposure, not more storms, drove the increase in claims

What drove the increase in claims? Between 2016 and 2023 claims per insured home rose 67 percent, more than the average rise in premiums, 46 percent. Most of the rise in claims came from the cost of rebuilding: the producer price index for residential construction goods rose 48 percent over the same years, by itself as large as the entire premium increase, and it has continued rising after 2023. The index is a proxy that covers materials, not labor, so the construction share in Chart 4 and the residual are both estimates. The rest is bigger claims, not more claims. Claim frequency did not grow between 2018 and 2022 while the average paid claim rose 26 percent. More valuable property now sits in the path of storms and fires: home values doubled nationally and nearly tripled in Florida from 2011 to 2023.

Chart 4: Components of Homeowners Insurance Premium Growth, 2016–2023

The weather record does not show more storms. NOAA finds no significant trend since 1900 in the number of U.S. landfalling hurricanes and a stable count of tornadoes rated EF1 and stronger. A rise in storm intensity is possible but not established, and the loss data cannot separate a possible rise in intensity from the certain rise in insured exposure. The two main studies of hurricane losses since 1900 restated for today's population, wealth and building costs (Weinkle et al. 2018; Muller et al. 2025) find no trend, although their method has critics and no equivalent study exists for the severe convective storms that dominate recent losses.

Availability tightened most in the West

Company-initiated nonrenewals between 2022 and 2024 roughly doubled in the Northeast, increased two and a half times in the Midwest, and tripled in the West, to 25 per thousand policies. The stated reasons are related to costs. California is the clearest case: rate increases there require prior approval, and until late 2024 insurers could use neither catastrophe models nor reinsurance costs in setting them, so the adjustment came through reduced supply rather than higher homeowners insurance rates. The residual market of Fair Access to Insurance Requirements (FAIR) plans and state-run insurers doubled from a 2018 low, and its growth has moved from Florida to California, where the FAIR Plan has grown 157 percent since 2022. While California’s rate approvals accelerated in 2024–2025, its FAIR Plan kept growing, a sign that rates still sit below what the market would charge. The FAIR Plan levied a $1 billion assessment on private insurers after the January 2025 fires, half of it recoverable from policyholders.

Conclusion

The premium increases observed from 2021 to 2025 were driven by rising rebuilding costs and growing insured values, a repricing of real costs. At the national level, the slowing of home price appreciation alleviates pressure on coverage amounts and the repricing appears largely done for now. The cycle has not gone away, however: the next bad year will start that cycle again, albeit with the industry in a stronger position, as homeowners insurance is back to, and in 2025 above, the overall P&C industry’s returns.

References

NAIC (HO-3 premiums, 2011–2023; Profitability by Line by State, 2024); NAIC, Rate Filing Methods for Property/Casualty Insurance (2026); BLS CPI-U and PPI; FHFA house price index; Freddie Mac (escrow-based premium data, 2018–2023); S&P Global RateWatch; GAO (Homeowners Insurance: Premiums Generally Tracked Inflation but Rose More in Disaster-Prone Areas, 2026); Triple-I/Milliman (May 2026); ISO/Verisk; NAIC MCAS; Florida OIR; PIPSO; California FAIR Plan; California Department of Insurance; Louisiana DOI; NOAA and IPCC; Weinkle et al. (Nature Sustainability 2018); Muller et al. (BAMS 2025).

THREE QUESTIONS

with Dror Oppenheimer, Co-Founder of Gate House Strategies, LLC

Dror Oppenheimer is a Co-Founder of Gate House Strategies, LLC, a Washington, DC-area advisory firm focused on financial services, mortgage lending and servicing, community development, and affordable housing. He previously served as Senior Advisor to the FHA Commissioner, advising on Single Family servicing policy, technology modernization, and FHA's response to COVID-19.

The Federal Housing Administration (FHA) has put a potentially significant servicing reform on the Single-Family Housing Drafting Table: the proposed Reinstatement Advance Payment (RAP) Demonstration. Posted on July 20, 2026, the proposal would give servicers a voluntary alternative to the traditional FHA partial-claim structure, eliminating the need to create and record a separate subordinate lien.

1. What exactly is FHA proposing—and why?

Under the current FHA loss-mitigation framework, a partial claim allows FHA to advance funds to bring a delinquent borrower current. Those funds are generally secured through a zero-interest subordinate lien in favor of HUD. That structure creates a second lien that must be documented, recorded, tracked and ultimately collected when the first mortgage is paid off, refinanced, sold, transferred or otherwise terminated.

The proposed RAP would change the mechanics without changing the fundamental economics. Instead of establishing a separate partial-claim note and subordinate mortgage, the servicer would make a servicing advance covering eligible arrearages and secure that obligation under the existing FHA-insured first mortgage. The borrower would execute a zero-interest RAP Repayment Agreement. The debt would remain owed; RAP simply changes how it is documented and administered. That distinction is important. RAP is not debt forgiveness, rather, it is a different mechanism for carrying and ultimately collecting the same obligation.

The proposal also brings FHA closer to the operational approach used in the conventional market and is explicitly intended to facilitate sales, refinances, assumptions and transfers by eliminating the need to resolve a separate subordinate lien.

FHA's Reinstatement Advance Payment (RAP) proposal offers a positive and significant policy change that aims to solve for many challenges. The proposal has the potential to benefit borrowers, lenders and FHA alike. For lenders and servicers, the RAP would be secured by the first lien, eliminating the current need to execute and record a separate subordinate lien. This should reduce operational costs, paperwork and servicing complexity.

For FHA, the streamlined structure should make loss mitigation easier to administer and track while also reducing title-related complications. For borrowers, RAP preserves the benefit of a zero-interest advance while eliminating a separate lien that can complicate a future sale or refinance—making FHA's loss-mitigation process simpler while retaining the loss mitigation benefits without eliminating the borrower's obligation to repay the advance.

2. What are the implications for lenders—and what should servicers watch?

The proposal would not change the underlying loss-mitigation waterfall. Instead, RAP would provide an alternative method of structuring the partial claim or payment supplement, at the servicer's option. Participation would be voluntary, and servicers would not have to use RAP for every eligible transaction. The demonstration is proposed to run for five years.

For servicers, the potential for significant benefits would come from eliminating much of the current subordinate-lien workflow.

There are also additional benefits to the foreclosure and home disposition options. In an REO scenario, the RAP would be part of the foreclosure bid and thus more likely recoverable to FHA and the taxpayers – with much less challenge for servicers under the current second lien recovery process. And, in certain foreclosure scenarios, the proposed policy would eliminate the need to switch a non-judicial foreclosure to a judicial foreclose, which would provide cost benefits from a less cumbersome and complicated foreclosure process.

Servicers will need to establish systems and controls to accurately account for the RAP balance as a zero-interest obligation, reflect it in borrower statements and payoff quotes, monitor triggering events, and ensure the balance is properly collected when due. The draft also requires the RAP Repayment Agreement to be provided to HUD within specified timeframes. The most important implementation question may therefore be whether a servicer can integrate RAP cleanly into its existing servicing platform without creating a new set of reconciliation, compliance and investor-reporting risks.

And there is another wrinkle to be considered: RAPTOR—RAP Terms of Repayment. If the borrower reaches maturity and cannot repay the RAP balance in full, the proposal provides for structured repayment of up to 18 months for balances up to $5,000, 36 months for balances between $5,000 and $15,000, and 48 months for balances above $15,000.

It is worth noting that we are also hearing industry chatter regarding the proposed streamlined refinance process which would effectively create a need to establish a new and separate RAP balance, rather than fold the RAP balance into the first lien. This could create some complexity in separate accounting and tracking of the RAP balance. We expect the industry to provide feedback on this particular issue – the industry will likely be asking FHA to reconsider this requirement as part of the comments and feedback (the feedback due date was recently extended to September 18).

And, of course, it is worth noting that Ginnie Mae can also be expected to be scoping and reviewing RAP for security and operational implications, if any, to ensure a smooth transition.

FHA is also proposing to retain the current framework of financial incentives for participating servicers: $500 for a partial-claim RAP, $1,750 for a payment-supplement RAP, and reimbursement of up to $250 for required title-related expenses.

The practical takeaway: servicers should not view RAP simply as a paperwork reduction. They should map the end-to-end process—boarding, accounting, borrower communications, payoff, refinance, assumption, transfer, maturity, claims reporting and quality control—before deciding whether and how to participate. For servicers already managing the existing partial-claim process, RAP could also mean supporting two parallel processes for an extended period.

3. What does this mean for FHA and borrowers?

For borrowers, the immediate loss-mitigation benefit should remain largely unchanged: RAP preserves the ability to use FHA's existing loss-mitigation tools to avoid foreclosure and retain homeownership. The deferred amount remains interest-free, and repayment generally occurs upon maturity, sale, refinance, payoff or termination of FHA insurance. Borrowers may also make voluntary payments toward the RAP balance without penalty.

The bigger potential benefit is at the closing table. Eliminating a separate subordinate lien should reduce title complications and make sales, refinances and assumptions easier to execute.

For FHA, the potential benefit is consequential in terms of bringing more efficiency to the entire system. The proposed RAP would likely address OIG findings and recommendations related to the partial claim process that included concerns about manual processes and collections.

The proposal makes RAP more than a servicing modernization exercise. It has the potential to not only improve the architecture of the FHA loss-mitigation system while strengthening the government's ability to track and ultimately recover deferred debt, but it also offers the benefits of a much more streamlined process for both lenders and borrowers.

The proposal is still just that—a proposal. That said, this is a well thought out proposal to address multiple issues and challenges. And given the five-year demonstration framework and the meaningful operational changes contemplated in the 40-plus-page draft Mortgagee Letter, RAP appears to be a significant FHA priority. For FHA servicers, this is a proposal worth studying closely—not simply for what it eliminates, but for the new controls, systems and responsibilities it creates.

INSIDE VOICES

HUD's Note-Sale Strategy Is Worth Watching

FHA's permanent Single Family Loan Sale program, which was made final in December 2024, gives HUD a standing tool to sell seriously delinquent FHA-insured mortgages to private investors rather than take every loan through foreclosure and REO. More recently, on September 1, FHA offered roughly $450 million or 1,500 HECM notes for sale. Distressed loan sales is one of many ways that HUD continues to look to maximize overall recoveries and manage distressed assets.

ROAD Opens the Door for Small-Dollar Mortgages

The 21st Century ROAD to Housing Act, signed into law July 11, gives HUD/FHA authority to establish a four-year pilot for mortgages of $100,000 or less, the segment where fixed origination costs can make loans uneconomic for lenders. The law gives HUD a menu of potential tools, including direct payments to lenders, adjustments to FHA terms and costs, borrower grants and technical assistance. This will be an interesting test to see if HUD can change the economics of these small loans enough to bring lenders back into a market that is critical to lower-cost and rural homeownership.

Force-Placed Insurance Warning Shot

A recent $15.5 million lender settlement is more than another servicing enforcement action—it is a reminder that force-placed insurance remains a regulatory hot button. The settlement covers allegations of improperly placed coverage on 4,200+ borrowers who already had insurance, generating roughly $4.5 million in consumer harm. The settlement involved 48 state financial regulators across 47 states, with DC leading the enforcement team, signaling how aggressively states can act collectively when servicing practices raise consumer-protection concerns. Expect force-placed insurance—and the systems used to identify, track and cancel it—to remain high on state regulators' servicing exam agenda.

Housing's Affordability Paradox

New-home sales fell 10.5% in July to a 607,000 annual pace—the lowest since January—while the median new-home price fell to $393,800. Existing-home sales also fell 1.7% in July to 4.06 million, while the median price rose 2% year-over-year to $434,100—the 37th consecutive month of gains. That creates a $40,300 median-price gap favoring new homes, while new-home inventory reached a hefty 9.6 months. Mortgage rates averaged 6.54% in July and briefly topped 6.7% in August—keeping affordability, not just prices, at the center of the housing story.

Fannie's Latest Shake-Up

Fannie Mae eliminated roughly a dozen senior positions in August, including at least 10 senior executives, in the latest move under FHFA Director Bill Pulte to streamline operations and cut costs. The departures span multifamily, capital markets, finance, regulatory affairs, communications, economic research and low-income housing tax credits. Pulte pointed to technology and the elimination of unnecessary processes as drivers of the cuts as he continues to put his stamp on the GSEs with focus on efficiency, technology and a leaner operating model.

THE GATE HOUSE INDEX

The Gate House Index and analysis is designed to provide insight into the status of FHA’s business at a moment in time and over a period of time, as well as other pertinent data points we’re following.

This month, we examine the rise in homeowners insurance premiums since 2011: how much premiums rose, what drove the increase, where it landed, and what it did to insurer returns and to the availability of coverage. We close with information related to the 3 Questions about HUD's proposed Repayment Agreement Program.

The first chart, in two panels, shows the rise in homeowners insurance premiums from 2011 to 2026. The top panel compares the NAIC's average HO-3 premium increase from 2011-2023 (+78 percent) to CPI-U (+36 percent), and the price of a fixed policy, measured by the BLS producer price index (+23 percent 2011-2022; +27 percent 2023-2025). The bottom panel shows the annual premium changes and the decline in regulator-approved rate increases from 2024 to YTD 2026.

Between 2016 and 2023 the average U.S. homeowners premium rose 46 percent while the PPI for residential construction goods rose 48 percent.

The states with the largest % increases since 2011 are hail states. Florida rose less than all but two states and DC; California rose less than the national average.

Over the decade through 2024 insurers lost money on homeowners coverage in ten states. Six of the seven with ten-year returns at or below minus 5 percent are interior hail states. Florida and California earned small positive returns over the decade, and Texas and North Carolina were profitable.

Availability tightened everywhere in 2023 and 2024, and most in the West. Nationwide, 2 percent of policies, 2.0 million of 103 million, were nonrenewed by their insurers in 2024.

Insurers did not capture the 2015-2024 premium increases as excess returns. Claims were 69 percent of premiums from 2017 to 2023 and the homeowners line lost money on underwriting in six of those seven years.

Between 2017 and 2023, return on capital for the homeowners line averaged 2 percent vs. 6.5 percent for the P&C industry as a whole. The 2024 recovery brought the homeowners return to 13.9 percent, matching the all-P&C figure for the year. One good year after a seven-year stretch of losses is the cycle working; net of reinsurance, the line still ran a small underwriting loss in 2024, as the table below the chart shows.

Homeowners multiple peril, countrywide. Source: NAIC, Report on Profitability by Line by State in 2024; direct basis is before reinsurance, net of reinsurance is the IEE basis.

The long-term weather record does not show an increase in hurricanes making landfall since 1900 or in EF1-and-stronger tornadoes since the 1950s, and wildfire acreage has been flat since 2000, though at about double the level of the 1980s and 1990s. What has risen is the value of property in the path of storms and fires. Billion-dollar disasters, an inflation-adjusted and loss-based measure, averaged 6.7 a year in the 2000s, 13.1 in the 2010s and 23 since 2020, with annual cost rising from $66 billion to $151 billion in 2026 dollars. Severe convective storms in the interior account for three quarters of the added events.

The residual market, the FAIR plans and state-run programs that insure properties no private carrier will, doubled in five years, and its growth moved from Florida to California.

Florida was an outlier with respect to litigation, generating 64 to 80 percent of the nation's homeowners lawsuits every year from 2016 to 2024 while its share of claims was about a tenth. After its 2022 and 2023 statutes, preliminary 2025 data show its share of suits dropped to 41 percent.

FHA's balance of single family notes receivable, primarily partial claim notes, has grown from $13.8 billion at the end of FY2020 to $40.1 billion at the end of FY2025.

Partial claims, standalone or combined with a modification, were part of 96 percent of the home retention actions completed in FY2024, up from 66 percent in FY2021.

The one-year redefault rate on home retention actions has climbed from 11 percent early in the pandemic to 58 percent for options given in the last quarter of FY2024. FHA cited this trend for the loss mitigation waterfall it put in place on October 1, 2025.

HUD's proposed Repayment Agreement Program would reduce servicing requirements for partial claims.

THIS MONTH IN HISTORY

London burns and creates the building code and the fire insurance market

A fire that began in Pudding Lane on September 2, 1666, burned for four days, destroying roughly 13,200 houses and leaving about 100,000 Londoners without shelter (London Museum). A week after the fire was extinguished, King Charles II proclaimed that “no man whatsoever shal presume to erect any House or Building, great or small, but of Brick or Stone.” Parliament wrote the proclamation into the Rebuilding of London Act 1666, which fixed building materials, wall thicknesses, and four standard house types, the first comprehensive building code in England. The code made fire loss more predictable, and Nicholas Barbon opened the Fire Office in 1680, the world's first commercial fire insurer,* looking to insure the lower-risk rebuilt housing. By 1690, about one London house in ten carried a policy (London Museum).

*Mutual fire insurance predates Barbon: the Schleswig-Holstein fire guilds (Brandgilden) date to the sixteenth century, and the Hamburger Feuerkasse, a public fund founded in 1676, is generally regarded as the oldest insurance company in the world. Both are in modern-day Germany.

FHA+ is published monthly by Gate House Strategies, a Washington, DC area-based advisory firm focused within the financial services, mortgage lending and servicing, community development, and public housing sectors. Contact us at FHAplus@gatehousedc.com