Maine’s insurance market is typically stable and profitable, but it was stretched by severe storms last year.
Payouts and other costs consumed nearly all of the revenue from premiums for homeowners insurance in Maine in 2023, meaning it was barely profitable, a report from The New York Times found last week.
“We have seen increasing premiums over the last few years that were justified due to higher losses and inflationary pressure,” Karma Lombard, a spokesperson for Maine’s Bureau of Insurance, said in an email. “We have historically maintained low homeowners insurance rates compared to the rest of the country, but we are seeing sharper increases as of late.”
Insurance agents who connect these sharp increases to more frequent and severe storms taking place are worried this means insurers might grow reticent to cover Maine’s coastal communities, or pull out of areas prone to flooding or wind damage entirely.
It’s a national trend. Storms caused by climate change have already led carriers to reduce their coverage in other states such as California and Florida, or pull out of them entirely. In the last two years, Gov. Janet Mills has requested eight federal disaster declarations in Maine.
Two of those disasters occurred this past winter alone, when severe wind storms and flooding in December and January killed four Mainers and caused an estimated $90 million in damages to public infrastructure across the state, as well as millions in damages to Maine homes, businesses and vehicles.
One New England-based carrier that operates in Maine paid out $6 million alone in losses, said Wendy Tapley, who owns a home, business and auto insurance agency in York and is a director of the Maine Insurance Agents Association.
“The insurance industry is still trying to recover from 2023, but it’s still getting slammed with poor weather incidents,” she said. “It’s very concerning.”
Homeowners insurance in Maine is vulnerable because of the age and declining quality of our state’s housing stock. More than a third of Maine’s homes were built before 1960, compared with 27 percent nationally. In some more rural regions of Maine, close to 60 percent were built before 1980, a state housing study found last October.
“Carriers are being very particular about the age of roofs now and their conditions,” Tapley said.
In states like California and Florida, where the Times found homeowners insurance has been unprofitable in several recent years, many homeowners haven’t been able to insure their homes at all because they’re in areas prone to flooding or wind damage. Such a pullback would be of large concern in coastal communities and other major ones along rivers.
There’s hope the state can avoid this fate. Maine’s insurance bureau is monitoring any changes to underwriting policies that would impact coastal communities with a goal of ensuring all homeowners can access insurance, Lombard said.
In the meantime, she encouraged homeowners to stay on top of repairs and take advantage of federal assistance programs to aid in that effort. She added that the bureau will be working closely with a commission that Mills formally established Tuesday that will develop Maine’s first plan for long-term infrastructure resilience and promises to bridge gaps in insurance.
Tapley said Maine’s insurance agents are frustrated but hope that since rates have already risen in recent years some claims will be offset.
“And, hopefully, the weather will collaborate,” she said.
