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How Do Real Estate Market Trends Impact Insurance

By May 4, 2021February 27th, 2024No Comments

Home buying trends have skyrocketed over the past year. The millennial age group has reached their 30s and the continued pandemic has put additional pressure on renters to relocate.

In turn, homeowners insurance trends are impacted. Carriers can expect higher expectations from policyholders to deliver unique products at affordable costs.

WaterStreet Company is here to help inform insurers of market trends. We are a provider of P&C Policy Administration Software, supporting insurers through policy and claims administration, document management, third-party connections and more.

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2021 Housing Market Trends

A recent study by has shown a major gap in both availability and affordability of homes on the market.

As of March 2021, national inventory on home listings declined 52% from the previous year and median listing price rose 15.6% to $370k. Homes spent 54 days on the market in March 2021, which is 6 days less than March of last year. Most areas have a seller’s market, which is unlikely to change through the year as demand continues to increase.

Over the past year, many renters have sought to become first-time homeowners. The pandemic has brought on a more urgent desire from renters to seek more space with a yard in a more affordable suburban location compared to renting within cities.

For the millennial age group in particular, those who were dedicated to homeownership before the pandemic are likely to act on buying a home as the country transitions “back to normal.” These individuals are most likely to have saved throughout the past year and will continue to enter the home buying market in rising numbers.

As companies begin inviting employees back to on-site locations, many employees are likely to seek permanent work from home status. Homeowners who have adapted to working from home may have purchased a home with an in-home office with this intent.

How Will Real Estate Trends Impact Insurance?

Shortly before the pandemic began, customer satisfaction with claims processing was at an all-time high thanks to technical innovations, including image and text recognition fueled by Artificial Intelligence in claims administration.

Insurers that fall behind on efficient claims management may suffer from poor customer experience. Homeowners are more inclined in today’s market to expect easy communication and fast payouts while open to switching carriers if their needs are not satisfied.

Those who are new to owning a home may not be familiar with homeowners insurance. For carriers, it’s important to identify new homeowners at the beginning of the sales process so that they are offered guidance and resources on choosing the best plan along with attention to how they are forming their decisions.

Policyholders are also more likely to seek competitive pricing without steep changes in premiums. In a hard insurance market, new products for homeowners that are positioned to save on costs by either covering select perils or reducing premiums can have a greater impact on buying decisions than in years past.

COVID-19 Impacts on Home Insurance

When renters or homeowners reside in their homes for the majority or entirety of their day, this can impact the risk of perils on the home.

Break-ins and theft are less likely to happen on properties that are closely surveilled by the homeowner. When property damage occurs, it’s also likely caught faster by the homeowner, leading to a faster FNOL to the insurer. As homeowners transition to working away from the home again and children go back to school, there may be a higher percentage of claims related to theft compared to last year.

Other accidents may have occurred more often over the past year as the property is more in use, whether related to injuries on the property or damage to the property. The homeowner may also have used electricity, water and other utilities more while staying at home compared to those who kept the same routine of leaving the home before and during the pandemic, adding to the costs to own and upkeep the home.

Additional expenses on the home may seem small, but can lead the homeowner to look for the easiest ways to reduce home costs, including comparing pricing on homeowners insurance or seeking additional coverage to accommodate added risk.

About WaterStreet Company

WaterStreet Company is dedicated to serving all facets of the Property & Casualty Insurance Sector. Many incumbent insurers are held back by dated legacy systems and can aim for better technology to detect fraud.

We understand the importance for carriers and MGAs to adapt to market changes.

Reach out to WaterStreet Company today to request a consultation and demo of our solutions.

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