On 9/7/2023, during Senate hearing, experts who testified before the committee said that home insurance premiums are up an average of 26.4% nationwide over the past few months and by as much as 120% in some markets. Florida homeowners, who pay an average of $4,200, have higher premiums than Louisiana, whose consumers pay an average of $2,038. The national average is $1,331, according to the the R Street Institute, a policy think tank that describes itself as center-right politically. The question to slow the surprising increase in the cost of homeowners’ insurance, is it better state regulation and more federal involvement? Some advocates argued the Senate committee looking at the impact of climate change on property insurance premiums.
No, countered supporters of the insurers, the goal should be to ratchet back unnecessary regulation and make it harder for homeowners from suing companies when dissatisfied with how their claims were handled.
Jerry Theodorou, who spent the past 15 years working as an analyst for the property and casualty insurance industry and now serves as policy director for insurance at the R Street Institute, added that what the public really needs is an education on how insurance works. “Yeah, they know how it works. It’s called write a check and then you have to sell blood plasma to go to the grocery store,” said U.S. Sen. John N. Kennedy, who had quizzed the experts on what they thought Congress should do about skyrocketing home insurance premiums. The Madisonville Republican is a member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
At least five large U.S. property insurers have stopped taking new customers, telling regulators that extreme weather patterns is the reason. Companies in some regions are selling more expensive policies that cover less and have higher deductibles.
Heller testimony to Senate Banking committee, Sept. 7, 2023
In addition to more disasters, insurance companies are also having to pay about 50% more for reinsurance, the policies they buy to mitigate their own losses during a catastrophe. It’s an unregulated market, Heller said. In most states, including Louisiana, insurers are allowed to pass along to consumers the increased costs of reinsurance.
The federal government should start selling reinsurance to help keep prices stable, said Michelle Norris, executive vice president of National Church Residences, a national group based in Columbus, Ohio, that provides income restricted and senior living apartments around the nation.
Norris and Heller also said the government should spend more to help owners make their homes more resilient, so they’d have less damages insurers would have to cover. “The push to introduce some sort of federal backstop or support, however well intentioned, would backfire, because contrary to popular opinion, the reinsurance market and the primary insurance industry is not on its knees,” he said. “It’s not collapsing.”
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Kennedy: carbon neutral solve flood insurance problem? lower insurance by education? Write a check!