Root seeks first-ever renters insurance rate increase in Tennessee
Root Insurance has filed for a significant rate hike in its Tennessee renters (HO4) program, requesting a 63.3% increase. The proposed rate change would affect both new and renewal policies, starting as early as August 12, 2024, for new policies and September 11, 2024, for renewals.
This filing addresses Root’s growing claims costs and adverse loss trends in Tennessee’s renters insurance market. Root currently has around 442 policyholders in the state, with a written premium volume of $103,352. This is the first rate adjustment since the product’s launch in April 2020. Since launching its renters product in 2019, Root has expanded into 9 markets, accumulating over five years of premium and loss data.
The company attributes the increase to several factors, including adverse claim development, particularly a significant wind claim in Chattanooga that impacted loss ratios.
Root provided the following financial details:
- Target Underwriting Profit: 5%
- Federal Tax Rate: 21%
- Pre-tax Investment Yield: 0.5%
- Expected Total Return Before Federal Taxes: 6.2%
Most policyholders (about 415) will experience rate increases between 55% and 70%, with some seeing a maximum increase of 71.6%.
