States are digging into homeowners insurance and why it’s hard to buy
State regulators across the country on Friday asked hundreds of insurance companies to provide details on how they price and structure their homeowners policies, as part of an effort to get to the bottom of why many property owners struggle to get and keep coverage.
The National Association of Insurance Commissioners, the group that represents regulators, said government agencies have written to more than 400 companies asking for detailed data on their homeowners’ insurance activities. The companies’ answers are due in early June and they must comply or risk fines.
The association’s president, Andrew N. Mais, Connecticut’s insurance commissioner, said a statement the group’s website called for “addressing the critical challenge of the affordability and availability of homeowners insurance and the financial health of insurance companies.”
Inflation and increasingly severe weather events due to climate change have recently upended many local homeowners insurance markets. Some major insurers have pulled out of states including Florida and California. In those places, and others hit hard by catastrophic events like storms and wildfires, some homeowners have reduced their coverage to cope with rising insurance costs.
“The most urgent need right now is to help communities adapt to climate-related risks and ensure they are adequately insured against events that cannot be prevented,” said Mark Friedlander, a spokesperson for the insurance industry, the Insurance Industry Association. Information Institute.
Some of the data will be shared with the Treasury Department’s Federal Insurance Office, which is conducting research on the impacts of climate change on the insurance industry. Mr. Friedlander said it could help the federal government develop policies to protect property owners in high-risk areas of the country.
The request is the regulators’ broadest response yet to major changes in the homeowners insurance market. Each company is asked to provide specific information about the types of coverage it offers in different zip codes and the recent history of claims payouts in those areas. Insurers will have to share information about the amount of their customers’ deductibles and the opportunities for discounts that customers can receive by repairing or upgrading parts of their home.
The regulators expect to use the data to create a clear and detailed picture of about 80 percent of all homeowners’ plans, as measured by total insurance premiums, according to Friday’s announcement.
The Consumer Federation of America, the Center for Economic Justice and Public Citizen, three groups focused on helping consumers obtain affordable insurance coverage, said in a joint statement Friday that the move was long overdue.
“Unlike regulators for other financial services, state insurance regulators have refused for decades” to collect the detailed auto and home insurance information needed to evaluate the market for consumers, the statement said.
The consumer groups also said that because regulators only asked for data on insurers’ plans for individual homeowners, they risked missing out on crucial information from policies issued to condo and cooperative associations and to affordable housing developers.