What Changed?
By late 2025, property insurance has quietly become the fastest-growing piece of the typical mortgage payment. ICE’s latest Mortgage Monitor shows average annual property insurance for single-family mortgage holders has climbed to nearly $2,370, now accounting for 9.6% of total monthly PITI — the highest share on record.
At the same time, the risk-transfer layer above insurers is shifting. Aon’s 2025 reinsurance renewal guide notes that insured catastrophe losses this year are roughly 75% above the eight-year average, and insurers are expected to increase property-catastrophe reinsurance limits by about 6% in 2025 and another 5% in 2026. That means carriers are buying more protection — and paying for it — even as capacity improves.
On the ground, regional restrictions are spreading. In October, Matic highlighted how the lapse of the National Flood Insurance Program on October 1 and the rise of “bluelining” — climate-exposed communities losing access to insurance and mortgages — are causing more policy lapses and coverage gaps. Put together, higher climate losses, more reinsurance, and tighter regional underwriting all point in the same direction: more expensive, harder-to-get coverage in 2025–26.
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The Numbers
ICE reports average property insurance payments rose 4.9% in the first half of 2025 and 11.3% over the past year, nearly 70% over five and a half years — pushing the typical annual bill to almost $2,370 and 9.6% of PITI.
Bankrate’s July 2025 breakdown, cited by Axios, pegs the national average homeowners premium at $2,470, up 9% since 2023; in California, average premiums jumped 41% over two years to $1,976, while Nebraska, Louisiana, and Florida are all above $5,700.
Fox Business reports that real-estate analytics firm Cotality expects homeowners insurance premiums to rise another 16% over the next two years — 8% in 2026 and 8% in 2027 — as climate-driven disasters and rebuilding costs keep pushing claims higher.
Aon’s September 2025 reinsurance renewal snapshot projects insurers will raise global property-cat reinsurance limits by about 6% in 2025 and 5% in 2026, even as abundant capacity and cat-bond issuance pressure pricing.
Matic’s October 2025 industry update flags the expiration of the National Flood Insurance Program and the spread of “bluelining,” where climate-risk geographies see reduced access to insurance and mortgage finance.
Why It Matters
For households, this is where climate risk becomes a line item. When insurance alone absorbs roughly one in every ten dollars of a mortgage payment — and is still rising — it acts like a structural tax on homeownership. The squeeze is most acute in high-risk states where premiums already exceed $5,000–$6,000 a year and non-renewals force borrowers into last-resort or surplus-lines markets.
For insurers, higher climate losses and more generous reinsurance limits raise the all-in cost of risk capital. Aon’s data suggest carriers are leaning into additional catastrophe protection in 2025–26, not backing away. That helps stabilize balance sheets but leaves less room to absorb shocks via margins alone — pushing more of the adjustment onto policyholders via higher deductibles, tighter terms, and premium hikes.
For markets and policymakers, these dynamics feed directly into macro conditions. Rising insurance costs support shelter and services inflation, even if goods disinflate. Fox Business notes that insurance now accounts for about 9% of the typical homeowner payment, and projections of another 16% increase by 2027 imply continued pressure on affordability and housing turnover. Regions facing bluelining and NFIP gaps may also see weaker collateral values and more volatile local credit conditions.
Takeaway
The coming insurance shock is not just about a bad season or one state’s crisis — it reflects a broad repricing of climate and capital costs into premiums. With property insurance now the fastest-growing component of mortgage payments, reinsurance limits rising, and coverage shrinking in the riskiest ZIP codes, investors should treat 2025–26 as a structural reset in how risk is priced across U.S. housing and commercial property, not a temporary spike.
— Lauren Brown
Editor, American Ledger
Sources
ICE Mortgage Technology, September 2025 https://ir.theice.com/press/news-details/2025/ICE-Mortgage-Monitor-Property-Insurance-Costs-Grow-11-3-over-the-Last-Twelve-Months/default.aspx
Fox Business, November 2025
https://www.foxbusiness.com/real-estate/homeowners-insurance-costs-could-spike-over-next-2-years