National plan to survey homeowners Insurers hit a hurdle
A sweeping effort by government regulators to figure out why homeowners insurance is so expensive and difficult for customers to obtain is already facing challenges as some crucial states say they may opt out of the call for data.
The National Association of Insurance Commissioners, an umbrella group representing state insurance regulators, said on March 8 that state agencies were asking insurers for detailed data on how they treated their customers, including information on the types of coverage they offer in different zip codes, recent history of claims payouts in those areas, the size of insurance customers’ deductibles and their options for discounts by repairing or upgrading parts of their home. At the time, a top NAIC official said the goal was to “address the critical challenge of the affordability and availability of homeowners insurance and the financial health of insurance companies.”
The group said data requests would reach more than 400 insurance companies and provide insight into about 80 percent of the plans of all homeowners in the United States, as measured by total insurance premiums. Some of the data would be shared with the Treasury Department to help identify where homeowners face the highest risks and costs of living. State and federal officials called the effort a turning point for the insurance industry. The request is the largest and broadest request for information insurance companies have faced from a regulator in decades. Such detailed data has never been collected at a national level.
But each state regulator can decide whether to participate in the data call, and some states where homeowners are most at risk of damage from severe storms and where insurance markets are most turbulent — such as Louisiana, Texas and Florida, where Republican politicians regularly hesitate on climate change policy – can share limited data or opt out of the program entirely.
Regulators say that even without full participation, the program is still a huge advance in their quest to understand what’s happening with homeowners’ insurance. But the states’ reluctance to participate could leave a significant hole in the picture regulators are trying to piece together about homeowners insurance markets across the country. It could hamper their efforts to decide exactly how to deal with the tangle of problems caused by inflation and increasingly severe weather events due to climate change that have led some major insurers to exit states such as Florida and California. In those places, and others hit hard by catastrophic events like storms and wildfires, some homeowners unable to afford rising insurance costs have reduced their coverage.
“It makes no sense to discount the 20 percent of the country with significant climate risk and associated consumer impacts, or to discount the types of insurance that impact the most vulnerable consumers,” said Birny Birnbaum , an insurance expert and executive director of the Center for Economic Justice, a nonprofit organization focused on equal access to economic opportunity.
At a Wednesday meeting of the Federal Advisory Committee on Insurance, attended by Treasury Department officials, insurance industry representatives and state regulators, Mr. Birnbaum told attendees that he feared as many as 10 states might refuse to share data .
Steven E. Seitz, director of the Treasury Department’s Federal Insurance Office, declined to name or discuss the states that did not participate, but said at the meeting that the data call was “a very positive first step in the data coverage”.
But Louisiana, Texas and Florida have already expressed reluctance to join the effort, with Louisiana pulling out completely.
John Ford, a spokesman for Louisiana’s insurance regulator, said its commissioner, Timothy J. Temple, had decided not to force companies operating in the state to share their data. Mr. Temple and his staff are “focused this year on regulatory and legislative efforts that will attract insurers to our state and stabilize the market,” Mr. Ford said.
Ben Gonzalez, a spokesman for the Texas Department of Insurance, said “Texas does not intend to collect new information” because it already collects data from insurers that “generally respond” to what the umbrella group requested.
Florida is considering what information to share, a spokeswoman said. A bill passed by the Florida Legislature this year would require insurers in the state to report zip code-level information about claim payouts. But they wouldn’t have to reveal the same kind of details about the policies they offered to their customers, such as the amount of their deductibles, that the National Association of Insurance Commissioners’ data call calls for.
Some information from states that opted out of the data call entirely could still find its way to the umbrella group. That’s because regulators in participating states, such as Pennsylvania, are asking national brands that operate in their states, such as State Farm and Nationwide, to share details about their homeowners’ plans wherever they are sold.
A spokeswoman for the NAIC said the group does not plan to publish a list of participating states.