Surging real estate activity amid low interest rates and favorable supply-demand dynamics have helped the U.S. title insurance segment remain resilient through recent COVID-19-driven turbulence, according to a new AM Best report.

A new Best’s Market Segment Report, titled, “Title Insurance Market Perseveres Amid Upheaval and Economic Uncertainty,” states that home sales and refinancing originations have gotten a boost from pent-up demand and low mortgage rates, as well as new demand from households looking for larger homes in less densely populated areas. At the same time, builders are experiencing a shortage of materials in the wake of the pandemic, which exacerbates the supply shortage. Low supply and high demand have increased the average price of homes sold, but buyers have benefited from additional purchasing power due to historically low mortgage rates. The low rates are generally a boon for the title insurance industry, according to the report, but uncertainty about containing COVID-19 continues to cast a pall over near-term U.S. economic prospects. Elevated jobless claims, along with a finite number of potential homebuyers, imperils the sustainability of housing demand, particularly if home prices keep rising because of supply and demand dynamics.

Prior to the pandemic surge, favorable employment trends, consumer confidence and consumer demand for homes were the main factors underpinning the solid housing and title insurance markets in the United States through the end of 2019 and into first-quarter 2020. Title insurers saw year-over-year growth of 6.5% to direct premiums written in 2019 to $15.3 billion, the highest annual percentage growth since 2016. Additionally, the report states that segment’s underwriting performance has remained very consistent for several years, with a five-year average annual combined ratio of 93.0 and a 10-year average of 95.0. The underwriting expense ratio also improved by 30 basis points in 2019, declining to 88.7