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The home insurance industry took a bit of a hit when the subprime mortgage market went bust, as did many other sectors peripherally related to the housing market. But there has since been some significant recovery, as more consumers return to homeownership these days, which should portend well for future growth. However, Americans may still be wary of the high costs usually associated with this kind of coverage, and as a consequence, it's probably going to be wise for insurance agents to try to explain the ins and outs of such costs, and why they're important.

Over the next five years or so, it seems the home insurance industry will likely continue to improve on a slow, steady path, according to the latest Homeowners' Insurance in the US report from the industry and market research firm IBISWorld. This will likely come from the fact that the housing market itself is probably going to move along roughly the same course, and a number of other factors could keep premium growth pushing forward nicely.

""While industry revenue has slowly recovered from the subprime mortgage crisis, industry operators struggled to deal with weakened demand and limited new business from a depressed housing market over the past five years,"" said Leah Goddard, an industry analyst for IBISWorld. ""Despite higher claims costs resulting from record losses over the period, higher premium rates and investment income offset underwriting losses, allowing industry operators to maintain profitability.""

Potential issues
However, the fact remains that home insurers still face significant risk in the market, the report said. Perhaps the largest of these is that global climate change may continue to bring unexpectedly intense storms that do major damage into greater prominence. That, in turn, could mean that it's easier for insurers to deplete their reserve funds when dealing with huge numbers of claims. Consequently, that could translate into heavy losses. Further, regulatory controls and growing competition could continue to weigh more heavily on individual insurers even as the industry itself continues to improve.

Insurance agents who can best help their clients understand what they're paying for every month when it comes to their homeowners' coverage will likely be the ones best poised to benefit as the industry continues to improve. Many clients may still have concerns, but the ability to provide good customer service - as well as the occasional discount - can go a long way toward keeping satisfaction and retention rates as high as possible.

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