First American Property & Casualty Insurance Company submitted a request to the Arizona Bureau of Insurance in August 2017 to increase the premiums for its homeowners insurance customers in the state by an average of 17.4%. The filing was approved on September 1. Policyholders will be affected on or after November 1, 2017, should they choose to renew their policies.
First American proposed rate impact
Premiums are estimated to increase for 14,414 policyholders in Arizona by an average of $138 per policy. As with most increases, though, the impact will be spread unevenly, with some policyholders receiving increases lower than that figure and others receiving larger hikes. In percentage terms, the company reports the proposed rate change will range from 16% to 19%.
As of 2016, the First American ranked 36th among home insurance carriers who are active in the state. The Arizona homeowners insurance market is highly concentrated. State Farm Fire & Casualty Company, commands more of the market than any other carrier, holds 18.9% of all policies in the state. First American is a very small player in the Arizona marketplace, with 0.6% of the homeowners market share.
Comparing rate changes
These hikes are among the highest rate increases to go into effect for homeowners insurance in Arizona in 2017. Among the 11 largest companies in the state, 9 have been approved for rate changes by regulators. The average increase in premiums arising from those decisions is 3.0%. Within the approved list, the largest hikes were for Chubb Limited Group (with an average increase of 6.5%); Liberty Mutual Group (4.9% on average); and United Services Automobile Association Group (4.8% on average).
When compared to the rest of the U.S., homeowners in Arizona enjoy some of the cheapest home insurance. Premiums are 29% cheaper than the average premiums for homeowners in the country as a whole, with Arizona policyholders facing an average annual fee of $765 to insure their homes. That annual tab translates into an average monthly cost of $64 for our sample homeowner.
Arizona's neighbors, Utah and Nevada, are on the the cheaper end of the spectrum. Our benchmark homeowners would be facing paying a monthly average of $53 and $59 respectively. However, in New Mexico, Arizona's Eastern neighbor, our sample homeowner pays a more expensive average of $78 per month.
Fire premium tax credit adjustment
Only two cities, Fountain Hills and Carefree, currently qualify for First Americans fire premium tax credit. Homeowners who reside in the Fountain Hills zip codes 85268 and 85269 will receive credit. The same goes for the Carefree zip 85377. The credit applied to these zip codes mirrors the credit given to those in the First American Specialty Homeowners Eagle Choice Program.