CBS News
Home insurance costs — already soaring — are likely to keep climbing. Here’s why.
Insurance companies are jacking up their premiums on homeowners to account for their rising losses from storms like Hurricane Beryl.
Although that will take a financial toll on millions of Americans, it could mean big profits for property and casualty insurers like Allstate and Progressive in the coming year. Investors have bid up shares in the sector roughly 19% so far this year, outpacing the S&P 500’s 17% gain.
Meanwhile, keeping homeowners’ insurance has become increasingly challenging for many people, particularly those who live in the growing number of areas around the country prone to natural disasters. For example, Oklahoma residents saw their home coverage costs surge 42% between 2018 and 2023, while rates in Arkansas and Texas soared 32.5% and 60%, respectively, according to an analysis from S&P Global.
Insurance rate hikes have long been a way for property insurers to offset the cost of catastrophic events. Hurricanes account for most insured catastrophe losses, according to investment research firm CFRA. Hurricane Ian in 2022 is a reminder of the risks facing insurers. It was among the costliest storms in U.S. history at just over $118 billion, according to National Oceanic and Atmospheric Administration. Hurricane Katrina in 2005 was the costliest hurricane in history, with total losses of $200 billion.
Double-digit increases
Across the U.S., most insurers lifted their rates for homeowners’ coverage by double digits last year, according to S&P Global. For instance, Progressive’s rates rose 10.4% in 2023, up from a 2.9% hike the previous year; Allstate’s rates jumped 10.2%, up from 4.3% in 2022.
Affordable housing providers, in particular, are facing sharply higher premiums — nearly 1 in 3 policies experienced rate increases of at least 25% in the most recent coverage renewal period, according to one analysis by a coalition of housing organizations.
The U.S. experienced 28 separate billion-dollar weather and climate disasters in 2023, the most ever, according to NOAA. That surpassed the previous high of 22 such events in 2020.
The current hurricane season is already one for the record books despite just getting underway. Beryl, the second named storm of the season, became the earliest storm to develop into a Category 5 hurricane in the Atlantic. NOAA is forecasting an above normal season with up to 25 named storms, up from 20 named storms and seven hurricanes in 2023.
That could drive home insurance costs even higher.
“If this grim forecast comes to fruition, it will likely buoy pricing for many lines of property-casualty insurance and reinsurance, providing certain underwriters’ shares with a catalyst,” CFRA analysts said in a report.
Property damage from a natural disaster “is one of the largest financial risks” a homeowner can experience, according to a May study by the Federal Reserve. Almost 2 in 10 U.S. adults reported being financially impacted by a natural disaster or severe weather event in the past 12 months, the study found.
Insurers are also reducing their exposure to outsized losses by cutting their business in disaster-prone states like California and Florida, with major insurance companies including Allstate and State Farm no longer renewing policies in extreme-weather areas. Farmers Insurance pulled out of the Florida market in 2023, while State Farm is scaling back coverage in California.
AAA last year also decided not to renew some policies in Florida, a state that has seen an increase in powerful storms and coastal flooding. Homeowners — who depend on their insurance policies to help with the steep price of paying for damages to their property in the event of accidents and bad weather — are forced to find another insurer at a higher premium when insurers say they’re backing out.
Highest premiums in two decades
The industry has been raising premiums for about six years now, CFRA said. Cumulative rate increases over the years have compounded pressure on homeowners. Premiums for property and casualty insurance are now at their highest levels in more than two decades, according to the U.S. government data from the producer price index.
As a result, Wall Street expects Progressive’s earnings to nearly double in 2024 after jumping by 50% in 2023.
“We got ahead of the curve as far as pricing.” said Progressive CEO Tricia Griffith, during a May conference following its first quarter report. “We’re seeing that with our growth and hope to continue to see that.”
Analysts expect Travelers to report a 36% jump in 2024 earnings per share following a modest gain in 2023. Allstate’s profit is expected to skyrocket compared to weak growth in 2023 as it moves past the big cost impact from Hurricane Ian.
CBS News
After Tyre Nichols’ fatal beating, Memphis officer texted photo of bloodied man to ex-girlfriend, she testifies
A former Memphis police officer charged in the fatal beating of Tyre Nichols sent his ex-girlfriend a photo of the badly injured man on the night he was punched, kicked and hit with a police baton following a traffic stop, according to trial testimony Wednesday.
Brittany Leake, a Memphis officer and Demetrius Haley’s former girlfriend, testified during the criminal trial that she was on the phone with Haley when officers pulled Nichols over for a traffic stop. She said she heard a “commotion,” including verbal orders for someone to give officers his hands.
The call ended, but Haley later texted the photo in a group chat comprising Haley, Leake and her godsister, she testified. Prosecutors displayed the photo for the jury. It showed Nichols with his eyes closed, on the ground with what appeared to be blood near his mouth and his hands behind his back.
Leake said that when she saw the photo, her reaction was: “Oh my God, he definitely needs to go to the Med.”
The Med is shorthand for Memphis’ trauma hospital.
The fatal beating, caught on police bodycams and street surveillance cameras, has sparked protests and calls for police reform. Officers said they pulled over Nichols for reckless driving, but Memphis’ police chief said there was no evidence to substantiate that claim.
Haley, Tadarrius Bean and Justin Smith are on trial after pleading not guilty to charges that they deprived Nichols of his civil rights through excessive force and failure to intervene, and obstructed justice through witness tampering. Their trial began Sept. 9 and is expected to run three to four weeks.
George Walker IV / AP
The Memphis Police Department fired the three men, along with Emmitt Martin III and Desmond Mills Jr., after Nichols’ death. The beating was caught on police video, which was released publicly. The officers were later indicted on the federal charges. Martin and Mills have taken plea deals.
During her testimony Wednesday, Leake said she deleted the photo after she saw it and that sending such a photo is against police policy.
“I wasn’t offended, but it was difficult to look at,” she said.
Leake said Haley had sent her photos before of drugs, and of a person who had been injured in a car accident.
Earlier Wednesday, Martin was on the witness stand for a third day. Defense attorneys tried to show inconsistencies between Martin’s statements to investigators and his court testimony. Martin acknowledged lying about what happened to Memphis Police Department internal investigators, to try to cover up and “justify what I did.”
But Martin said he told the truth to FBI investigators after he pleaded guilty in August, including statements about feeling pressure on his duty belt where his gun was located during the traffic stop, but not being able to see if Nichols was trying to get his gun. Martin has testified that he said “let go of my gun” during the traffic stop.
Martin Zummach, the attorney for Justin Smith, asked Martin if he knew of any reasons why Nichols did not simply say, “I give up.”
“He’s out of it,” Martin said. “Disoriented.”
Martin testified that the situation escalated quickly when Haley pulled his gun and violently yanked Nichols from his car, using expletives and failing to tell Nichols why he had been pulled over and removed from the vehicle.
“He never got a chance to comply,” Martin said.
Nichols, who was Black, was pepper sprayed and hit with a stun gun during the traffic stop, but ran away, police video shows. The five officers, who also are Black, then beat him about a block from his home, as he called out for his mother.
Video shows the officers milling about and talking as Nichols struggled with his injuries. Nichols died Jan. 10, 2023, three days after the beating.
An autopsy report shows Nichols – the father of a boy who is now 7 – died from blows to the head. The report describes brain injuries, and cuts and bruises on his head and elsewhere on his body.
Jesse Guy testified that he was working as a paramedic for the Memphis Fire Department the night of the beating. He arrived at the location after two emergency medical technicians, Robert Long and JaMichael Sandridge.
Guy said he was not told about the medical problems Nichols had experienced before he arrived, and that Nichols was injured, seated on the ground and unresponsive.
Nichols had no pulse and was not breathing, and it “felt like he was lifeless,” Guy said.
In the ambulance, Guy performed CPR and provided mechanical ventilation, and Nichols had a pulse by the time he arrived at the hospital, the paramedic said.
Guy said Long and Sandridge did not say if they had checked Nichols’ pulse and heart rate, and they did not report if they had given him oxygen. When asked by one of Bean’s lawyers whether that information would have been helpful in treating Nichols, Guy said yes.
Long and Sandridge were fired for violating fire department policies after Nichols died. They have not been criminally charged.
The five officers also have been charged with second-degree murder in state court, where they pleaded not guilty. Mills and Martin are expected to change their pleas.
Federal prosecutors have previously recommended a 40-year sentence for Martin. A date has not been set in state court yet.
Nichols worked for FedEx, and he enjoyed skateboarding and photography. The city of Sacramento, where Nichols grew up, named a skatepark in his honor. “Tyre fell in love with skateboarding at a young age and it wasn’t long before it became a part of his lifestyle,” states the resolution approved by the city council. He had a tattoo of his mother’s name.
“Tyre Nichols’ family have been praying for justice and accountability from the very beginning of this tragedy,” Ben Crump and Antonio Romanucci, the civil rights attorneys representing Nichols’ family, said in a statement when the trial began.
Boeing’s CEO said Wednesday that the company will begin furloughing “a large number” of employees to conserve cash during the strike by union machinists that began last week.
Chief Executive Kelly Ortberg said the people who would be required to take time off without pay starting in coming days include executives, managers and other employees based in the U.S.
“While this is a tough decision that impacts everybody, it is in an effort to preserve our long-term future and help us navigate through this very difficult time,” Ortberg said in a company-wide message to staff.
Boeing didn’t say how many people will face rolling furloughs, but the number is expected to run into the tens of thousands. The aerospace giant had 171,000 employees at the start of the year.
About 33,000 Boeing factory workers in the Pacific Northwest began a strike Friday after rejecting a proposal to raise pay by 25% over four years. They want raises of at least 40%, the return of a traditional pension plan and other improvements in the contract offer they voted down.
Scott Brauer / Bloomberg via Getty Images
The strike is halting production of several airplane models including Boeing’s best-selling plane, the 737 Max. The company gets more than half of the purchase price when new planes are delivered to buyers, so the strike will quickly hurt Boeing’s cash flow.
Ortberg said selected employees will be furloughed for one week every four weeks while retaining their benefits. The CEO and other senior executives will take pay cuts during the duration of the strike, he said, without stating how deep the cuts will be.
All work related to safety, quality, customer support and certification of new planes will continue during the furloughs, he said, including production of 787 Dreamliner jets, which are built by nonunion workers in South Carolina.
Ortberg said in a memo to employees that the company is talking to the International Association of Machinists and Aerospace Workers about a new contract agreement that could be ratified.
“However, with production paused across many key programs in the Pacific Northwest, our business faces substantial challenges and it is important that we take difficult steps to preserve cash and ensure that Boeing is able to successfully recover,” he said.
Boeing’s chief financial officer warned employees earlier this week that temporary layoffs were possible.
The company, which is based in Arlington, Virginia, but has most of its commercial-airplanes business located in the Pacific Northwest, is also cutting spending on suppliers, freezing hiring and eliminating most travel.
Despite two full days of talks assisted by the Federal Mediation and Conciliation Service, the union said Wednesday that no resolution had been reached and no additional negotiations were scheduled, according to CBS Seattle affiliate KIRO-TV.
Striking workers are picketing at several locations in the Seattle area, Oregon and California. The union, which recommended the offer that members later rejected by a 96% vote, is surveying the workers to learn what they want in a new contract. The union’s last strike at Boeing, in 2008, lasted about two months.
If the walkout doesn’t end soon, Boeing’s credit rating could be downgraded to non-investment or junk status, which would make borrowing more expensive. Shortly after the walkout began Friday, Moody’s put Boeing on review for a possible downgrade, and Fitch said a strike longer than two weeks would make a downgrade more likely.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.