Arkansas Legislators to Address Rising Homeowners Insurance Premiums in 2025 Session

Arkansas lawmakers are preparing to tackle the rising costs of homeowners insurance premiums during the 2025 legislative session. At a recent meeting of the Senate and House Committees on Insurance and Commerce, officials from the Arkansas Insurance Department briefed lawmakers on the sharp increase in rates and the impact it is having on homeowners.

Insurance premiums in the state have risen by an average of 15 to 20 percent in the past year, driven largely by damages from wind and hail, the primary weather risks in Arkansas. According to the Insurance Department, property insurance companies in the state paid out more in claims than they collected in premiums, with a loss ratio of 130 percent in 2023. The state’s top insurers collected $1.6 billion in premiums but paid out $2 billion in claims.

As a result, several insurance companies have stopped offering policies in Arkansas, and costs continue to rise. In response, lawmakers are exploring options to help hold down rates, including looking at mitigation programs used in neighboring states like Alabama, where homeowners can receive up to $10,000 to retrofit their homes to better withstand storm damage. Insurance companies offer discounts for homes with these features.

Additionally, Arkansas has recently allowed split deductibles, where a separate deductible applies to roof damage caused by wind or hail. The state was the last in the U.S. to adopt this policy.

Some proposed solutions, such as allowing higher deductibles of $20,000 to $30,000 or offering coverage based only on remaining mortgage debt, may present challenges due to potential conflicts with mortgage holders and reinsurance companies. Despite these hurdles, legislators are committed to exploring all avenues to help lower homeowners’ insurance costs.