Senate Committee Hears Testimony on Property Insurance Issues

From the Maui wildfires to Hurricane Idalia hitting Florida, extreme weather events have caused severe devastation to homes and businesses this summer.

Source: Spectrum News 9 | Published on September 8, 2023

millions of homeowners uninsured

On Capitol Hill, consumer and affordable housing advocates sounded the the alarm Thursday on property insurance costs and availability during a Senate Banking, Housing and Urban Affairs Committee hearing.

Douglas Heller, director of insurance at the Consumer Federation of America, said the property insurance crisis is a national problem. He called for federal investments and incentives in building more resilient homes, and a federal re-insurance program.

"We're hearing more and more — people simply cannot afford to own a home because they can't get insurance," Heller said.

Heller testified that some Americans are paying more than $500 per month for basic home insurance, yet many insurers are dropping policies or getting out of states entirely. He also noted "exploding prices" in the global reinsurance market.

Sen. Sherrod Brown of Ohio, the Democratic chairman of the committee, said as climate exposure increases, more and more people are turning to insurers of last resort, like Citizens in Florida.

"In Florida since 2020, 16 severe storms and hurricanes have caused more than $100 billion worth of damage and lead to an exodus of insurers," Brown said. "Farmers Insurance became the fourth in Florida alone insurer to exit the market."

Experts say the issue is also causing a strain on affordable housing providers.

"At National Church Residences, we have seen the property insurance liability for our affordable housing properties increase by over 400% over the last six years," said Michelle Norris, the organization's executive vice president of external affairs and strategic initiatives.

Jerry Theodorou with the R Street Institute, a conservative think-tank, pointed to state government regulation in California and “excessive litigation” in Florida as key drivers for insurance companies leaving.

"For years, Florida had the dubious distinction of being home to 79% of the homeowner insurance litigation in the country, despite having only 9% of the country's homeowner insurance policies," Theodorou said.

Some Republicans on the committee said the issue should primarily be dealt with at the state level.

"I don’t believe the mindset that some of my colleagues have here that this can be fixed in Washington," said Sen. Thom Tillis of North Carolina. "It needs to be addressed on a state-by-state basis. We have to provide a backstop for flood insurance, we have to address these problems, but it’s not going to come from compelling a private sector business to serve a market that cannot be sustained with all the constraints that they have on rating for the risk."