U.S. home insurers suffered their worst underwriting loss this century in 2023, as a toxic mix of natural disasters, inflation and population growth in at-risk areas put a vital financial market under acute pressure, according to rating agency AM Best.

Insurers providing policies to homeowners were hit with a $15.2 billion net underwriting loss last year, according to figures from rating agency AM Best, saying that the figure was the worst since at least 2000 and more than double the losses since the previous year.

The report identified increasing population in the areas most vulnerable to natural disasters as a key factor — citing census figures showing that six states prone to severe weather, including California, Texas and Washington, accounted for half of the country’s population growth in the 2010s.

“A growing population means an even larger rise in real property development and thus in insured values,” said Christopher Graham, senior industry analyst at AM Best.

“Construction in catastrophe-prone areas adds to flood risk. It also increases the risk of wildfires in areas prone to them due to human activity, as well as utility companies, he added.”

AM Best said it believes that a return to underwriting profitability for the segment over the near term is unlikely.

The Financial Times first reported on Sunday the details of the AM Best report.