Homeowners are expected to pay an average of $608 for insurance this year, an increase of 2.8 percent over 2003. Last year, the rate increase was 7.4 percent compared with 2002, an industry organization reported recently.

A dip in the frequency and cost of claims -- and insurers' rising profits -- have meant a slower rise in the cost of homeowners' insurance, according to the Insurance Information Institute.

The premium figures are national averages and reflect rate increases as well as jumps in the replacement value of homes.

Premium increases may be bigger in states where claims related to hurricanes, tornadoes and other storms have been concentrated.

Reasons for smaller premium increases this year include about a 1 percent decrease last year in the frequency of claims, said Robert Hartwig, senior vice president and chief economist for the insurance institute.

Homeowners are accepting higher deductibles, which means fewer claims of relatively small size, Hartwig explained.

Reports filed also reflect the ebbing of the "mold crisis," said Hartwig. He was referring to a flood of mold-related claims that once hit Texas and some other states, but that claims crisis peaked in 2002.

Most states, he noted, have approved mold exclusions in homeowner policies.

In addition, the level of competition among insurers "remains relatively high and probably is going to increase in a few states because of the ebbing of the mold crisis," Hartwig said.

Some companies, he said, are "approaching a reasonable rate of return" on homeowners insurance, indicating less need for steep rate increases. Some companies are eager to build market share, but Hartwig said consumers shouldn't expect wild price chopping.

"No insurer today is under the illusion that investment gains are going to paper over underwriting and pricing mistakes," Hartwig said.

Last year, insurers paid out an estimated $1.03 in homeowner claims for every $1 collected in premiums. With investment income and gains figured in, the homeowners' line is now generally considered profitable.

But between 2000 and 2002, homeowners insurers paid out an estimated $13.5 billion in claims than they collected in premiums, the insurance institute reported.