Twin Affordability Crises Are Reshaping the US Insurance Market in 2026

Here is the latest on ACA subsidy cliff home. America’s insurance industry is being squeezed from two directions at once this year. In fact, on the health side, the expiration of enhanced Affordable Care Act subsidies has triggered the sharpest one-year enrollment drop in the marketplace’s history, according to KFF. Meanwhile, on the property side, homeowners insurance premiums are on track to rise for a fifth consecutive year as insurers price in worsening climate losses and soaring rebuilding costs. According to a report from Insurify. Together, the two trends are pushing insurance affordability to the center of the national economic conversation heading into the fall.

Key Facts

• ACA Marketplace sign-ups fell by more than 1 million to 23.1 million during 2026 open enrollment, and KFF projects effectuated enrollment could ultimately drop to roughly 17.5 million — a loss of about 4.8 million people compared with 2025 — after enhanced premium tax credits expired at the end of 2025.
• Average monthly premium payments for ACA enrollees who kept coverage rose 58%, from $113 to $178, while average deductibles jumped 37% (up $1,027) to a record $3,786, KFF reports.
• Insurify projects the average US home insurance premium will rise 4% in 2026 to $3,057, following a 12% jump in 2025 — a cumulative 46% increase since 2021, nearly triple the rate of inflation.
• California homeowners face the steepest projected 2026 increase among states, up 16%, followed by Nebraska (13%) and New Mexico (11%), per Insurify.
• The US property-casualty insurance industry’s underlying growth is projected to fall to -3.7% in the first half of 2026, down from 1.6% in 2025, even as underwriting results improved, according to Reinsurance News. This detail matters for anyone following ACA subsidy cliff home.

The ACA “Subsidy Cliff” Hits Millions (ACA subsidy cliff home)

The enhanced premium tax credits first created under the American Rescue Plan in 2021. Also, and extended through 2025 by the Inflation Reduction Act. Lapsed at the start of this year after Congress did not renew them. KFF’s marketplace tracker describes the resulting enrollment decline — down more than a million sign-ups during open enrollment. With effectuated coverage projected to fall further as the year goes on — as “the sharpest single-year drop since the ACA Marketplaces launched.” This detail matters for anyone following ACA subsidy cliff home.

Coverage losses have not fallen evenly. Meanwhile, young adults between 18 and 34 accounted for 46% of the decline, according to KFF. As healthier and typically lower-cost enrollees were more likely to walk away when premiums rose. More strikingly, people earning between 400% and 500% of the federal poverty level — who made up just 3% of 2025 enrollees — accounted for 27% of the people who dropped coverage. Because they lost subsidy eligibility entirely once the enhanced credits expired. CNBC has reported that some of these consumers now face “astronomical tax bills” tied to the subsidy cliff. For now, this detail matters for anyone following ACA subsidy cliff home.

The premium increase for people who stayed enrolled was smaller than many analysts initially projected. KFF notes, largely because many buyers shifted into cheaper, higher-deductible bronze plans. And because those facing the very steepest premium hikes were disproportionately the ones who left the marketplace altogether. That shift shows up starkly in deductibles. As a result, this posted their largest single-year increase on record as enrollees traded lower premiums for higher out-of-pocket exposure. This detail matters for anyone following ACA subsidy cliff home.

Homeowners Insurance: A Fifth Straight Year of Increases (ACA subsidy cliff home)

On the property side, Insurify’s 2026 home insurance report projects a more modest but still persistent national increase — about 4%. Compared with last year’s 12% spike — bringing the average annual premium to roughly $3,057. The firm points to two intertwined drivers: increasingly frequent severe convective storms. Still, including tornadoes and hail events concentrated in the Midwest and Great Plains. And a 15% jump in building material costs over the past year that raises the price of every claim insurers pay out. This detail matters for anyone following ACA subsidy cliff home.

The pain is not distributed evenly across the country. Insurify’s data show premiums in the 25 most expensive states rose 14% in 2025. In fact, compared with just 5% in the 25 cheapest states. Reflecting how insurers are concentrating rate increases in disaster-prone regions. California tops the list of states facing the largest 2026 increases at 16%. Even though Florida remains the single most expensive state for coverage overall, with average premiums projected to reach $8,458.

California’s Wildfire-Scarred Insurance Market Keeps Shifting (ACA subsidy cliff home)

California remains the epicenter of the homeowners insurance disruption. According to a market roundup from Latent Insurance. The state’s FAIR Plan — the insurer of last resort — absorbed roughly $4 billion in losses from the January 2025 Palisades and Eaton fires. This destroyed more than 16,000 structures and generated an estimated $28 billion to $35 billion in insured losses. The FAIR Plan levied a $1 billion special assessment on member insurers in early 2025 and has since filed for a 35.8% rate increase that remained under review by the California Department of Insurance as of mid-2026.

Under the state’s Sustainable Insurance Strategy. Meanwhile, this lets insurers factor catastrophe models and reinsurance costs into rates in exchange for committing to write more policies in high-risk areas. Some carriers have begun cautiously re-entering the market. Mercury Insurance and CSAA both received approval for 6.9% rate increases tied to commitments to write tens of thousands of new policies in distressed areas. And Travelers announced participation in April 2026 — the first new commitment from a top-10 national carrier since the fires. State Farm General, meanwhile, finalized a 17% homeowners rate increase in March 2026 and continues to limit new business in much of the state. For now, operating under emergency interim rates first approved in 2025.

Industry Growth Slows Even as Underwriting Improves

Beneath these consumer-facing pressures, the broader property-casualty insurance industry is navigating a paradox: underwriting performance has improved even as premium growth slows. Reinsurance News, citing recent industry projections. Reports that the sector’s underlying growth is expected to fall to -3.7% in the first half of 2026. A sharp reversal from 1.6% growth in 2025. As a result, at the same time, the industry’s net combined ratio — a core measure of underwriting profitability — reached its best level in more than a decade in 2025. With personal auto and homeowners lines both posting notable improvement.

Michel Léonard, chief economist at the Triple-I (Insurance Information Institute). Was quoted noting that insurers continue to operate in “an environment marked by elevated catastrophe risk. Higher claims severity,” even as pricing discipline pays off on the underwriting side. Still, replacement cost growth, currently running around 2.1%, is expected to accelerate through 2028. According to the same outlook, suggesting rate pressure on homeowners is unlikely to ease soon.

What Comes Next

Both stories point toward the same underlying tension: insurance is becoming a larger and more contested line item in American household budgets. Whether through employer-independent health coverage or the cost of protecting a home. Congress has shown no clear signs of restoring the enhanced ACA subsidies before the next open enrollment period. And insurers in disaster-exposed states continue to argue that rates still lag the true cost of risk. For millions of consumers, the practical result this year has been the same regardless of which type of policy is in question: pay significantly more. Accept significantly less coverage, or go without.

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