Earlier today, the U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing, “Perspectives on Challenges in the Property Insurance Market and the Impact on Consumers."

The hearing included live testimony from Douglas Heller, director of insurance at Consumer Federation of America; Michelle Norris, executive vice president of external affairs and strategic partnerships at National Church Residences; and Jerry Theodorou, policy director of finance, insurance and trade at the R Street Institute.

The hearing highlighted the recent property insurance market turmoil due to the major disasters in Florida, Georgia, the Carolinas, California, Hawaii and Vermont. Wildfires, hurricanes, and other natural disasters have put significant stress on the market and made it difficult for homeowners and businesses to find and purchase insurance throughout the country.

Severe weather-related losses in the U.S. have been on the rise, with 2022 marking the eighth consecutive year of experiencing 10 or more billion-dollar extreme weather events. Since 1998, there have been 13 years with at least 10 such events. In 2022, the costs associated with natural disasters exceeded $165 billion, making it the third-highest year ever in terms of weather-related losses. Since 2017, only one year had total losses below $100 billion.

In 2022, Americans paid $125 billion for homeowners insurance and the increase in home insurance premiums rose about 40% faster than inflation as measured by the Consumer Price Index, according to the National Association of Insurance Commissioners. However, even with those premium increases, AM Best says the insurance industry netted an underwriting loss of $26.5 billion in 2022.

While extreme weather and catastrophic disasters were top of mind during the hearing, inflation and regulatory hurdles were also cited as contributing to this crisis. Witnesses discussed the Fair Access to Insurance Requirements (FAIR) plans, specifically in California and Florida.

Theodorou testified that “government-imposed price controls and other interventions lead to disruption and can, in extreme instances, result in crisis conditions where choice is limited and prices rise unmanageably."

Also, while tort reform was enacted in March of this year in Florida, Theodorou said that it will take time for the rate reduction to materialize to consumers.

As Congress continues to hold hearings on natural disasters and the impact they have on the insurance market, the Big “I" will provide updates through the News & Views e-newsletter.

Corey Miller is Big “I" director of federal government affairs.