Last Wednesday, Travelers hit an all-time high. The stock closed at $398.95. In May, a Wall Street Journal analysis sat on kitchen tables across the country. The five biggest home insurers in America closed more than 44 percent of claims last year without paying a dime.
Your home insurance bill has jumped 46 percent since 2021. The company cashing your check just posted record net investment income. I can't stop thinking about that gap.
Here is the number that stopped me cold. Travelers ran a 68 percent underlying combined ratio in its homeowners unit last quarter. That is industry jargon. Let me say it the way you would at dinner. For every dollar you paid in premium, Travelers spent 68 cents on claims and costs. The other 32 cents was pure profit. Before any major storm even hit.
How did they do it? Two moves at once. They raised renewal prices 5.4 percent. Then they dropped about 4 percent of their customers in the same quarter. Fewer people paying much higher bills. The stock loves the math. Your wallet does not.
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Now zoom out. The Wall Street Journal dug through filings from the five biggest home insurers. Allstate. Farmers. Liberty Mutual. State Farm. USAA. More than 44 percent of all claims in 2025 were closed with zero payment. Not reduced. Not delayed. Zero. A separate Weiss Ratings study found that 15 large carriers denied more than half of all claims. One company in Texas closed 78 percent without paying a cent. I don't think most people realize how tilted this game has become.
The insurers will tell you some of those claims fell below deductibles or got withdrawn. That covers a piece. It does not cover more than 44 percent.
Think about what that means on your street. Ten neighbors file after a hailstorm. Four or five get a letter. Claim closed. No check. They paid their premium every year for decades. It did not matter.
The average homeowner is projected to pay $3,057 a year. Up from about $2,100 five years ago. One in four homeowners told a national survey they would drop coverage if they could. Most cannot. The bank holds the mortgage. The bank requires the policy. So the check gets written every single year.
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When a big insurer drops you, there is one place left to go. In California it is the FAIR Plan. The insurer of last resort. It now covers 696,562 homes. Its total exposure has exploded 250 percent since September 2022 to $768 billion. It was never built for that weight. It costs more and covers less. One bad fire season could crack it open.
This is not a left-right fight. I get it when people tune out Washington. But Senators Warren and Hawley sent letters to six insurers in early October. State Farm. Allstate. USAA. Liberty Mutual. Farmers. American Family. They demanded data on unpaid claims. The deadline was October 16. Nine days ago. When both parties feel the same burn, the fire is real.
Here's what worries me about State Farm. It made so much on auto insurance that it mailed a $5 billion refund to policyholders of 49 million vehicles this summer. A hundred bucks per vehicle. But on the homeowners side it needed a 17 percent emergency rate hike in California just to keep paying claims after the wildfires. One pocket hands back cash. The other one bleeds. You pay for both.
A Bank of America analyst maintained an Underperform rating on Travelers last week. He used a word I had never seen in a Wall Street note about an insurer. He said they are "overearning." His word. Not mine. The calm weather came and went. Nobody passed the savings to you.
The Fed meets Wednesday. If it hikes rates again, that helps the insurer more than it helps you. Higher rates boost the return they earn on your premium while it sits in the float. Every rate hike fattens their bottom line. Your bill just keeps climbing.
And here is the part nobody is connecting. Travelers sits in the Dow Jones Industrial Average. If you own a Dow index fund, you own this stock. Your retirement account goes up when they collect higher premiums and pay fewer claims. You are on both sides of this trade. You might not even know it.
Thirty-two cents. That is how much of every premium dollar Travelers kept as profit last quarter. You paid a dollar. They kept a third. And they still raised your rate 5.4 percent.
Your insurance card sits in a kitchen drawer right now. You write that check every year because you believe it means something. But when more than 44 percent of claims across the biggest names in the business go unpaid, that card starts to feel like a promise nobody plans to keep. Nobody knows when the next storm hits your zip code. The company betting it won't just hit an all-time high.
More on this tomorrow.
— American Ledger
