CFA official calls homeowners insurance crisis ‘unprecedented’

Douglas Heller, the Director of Insurance for the Consumer Federation of America, wasted no words this week while unveiling a new and startling report he co-authored titled “Overburdened: The Dramatic Increase in Homeowners Insurance Premiums and its Impacts on American Homeowners:”

“I can say that the homeowner's insurance crisis that is squeezing millions of Americans is unprecedented,” he said. “It demands the attention of government officials who are supposed to be there to protect consumers, but who have left homeowners with a market that's simply too expensive to be sustainable.”

The report shows that American homeowners saw insurance premiums increase by an average of 24% over the past three years. Nationally, CFA found homeowners saw their insurance premiums rise twice as fast as inflation between 2021 and 2024, which amounts to a $21 billion total price hike for Americans.

'A national crisis'

“This is not a state crisis or a regional crisis, but a national one,” Heller said. “Whether you are in Omaha or Orlando, Denver or Dallas, Washington, D.C., Minneapolis, or Los Angeles, the price of homeowners insurance has increased two, three, or even four times faster than inflation over the past three years.”

Heller accused the insurance industry and elected officials of promulgating a narrative that the only problems worthy of attention are concentrated in Florida, California, and Louisiana.

“But Americans throughout the country know that's not true, because they see the hike on their monthly insurance bills,” he said.

From 2021 to 2024, annual insurance premiums for a typical homeowner increased by an average of $648 across the country, the CFA researchers found. By 2024, typical homeowners paid $3,303 per year for homeowners insurance. Additional findings include:

• Premiums increased in 95% of U.S. ZIP codes, and consumers in one-third of ZIP codes saw their premiums rise by more than 30%.
• The sharpest increases were found in Utah (59% Increase), Illinois (50%), Arizona (48%), and Pennsylvania (44%).
• The most expensive states in which to insure a home are Florida, Louisiana, Oklahoma, Kentucky, and Nebraska.
• American homeowners who buy the most common coverage collectively paid an estimated $21 billion more in premiums in 2024 than in 2021. Adding in renters, condo owners, owners of manufactured homes, and homeowners who purchased less common coverage, Americans increased their annual payments to homeowners insurance companies by an estimated $27 billion over the past three years.

Policymakers 'need to take action'

“If we want to protect affordable homeownership, federal and state policymakers need to take action to address the rising costs and reduce risk for individuals and communities, said CFA’s Director of Housing Sharon Cornelissen, a lead author of the report.

CFA has called on lawmakers and regulators to require insurance companies to publicly disclose all transactions with consumers in ways that mirror the detailed data reporting of mortgage applications. Mortgage lenders have been required to report detailed mortgage data annually under the Home Mortgage Disclosure Act (HMDA) since 1975. While the National Association of Insurance Commissioners (NAIC) collected limited data about homeowners insurance last year, the Federal Insurance Office (FIO) has only made some of that data public.

“The lack of public data on insurance companies and their reluctance to share data makes it difficult to understand and address the insurance crisis,” Cornelissen said.

In “Overburdened,” CFA also makes policy recommendations on the need for increased investments in loss prevention, risk mitigation, and resilience; the creation of a federal reinsurance backstop to address the high costs of the “insurance for insurance companies” that is sold on an unregulated global market; and improving oversight of insurance company rate increases by state insurance departments.

Among the conclusions in the CFA report were:

• Investments in homes and infrastructure to lower risk should be prioritized.
• A public insurance backstop similar to the Terrorism Risk Insurance Act should be established.
• State insurance commissioners should critically evaluate insurance rates and company decisions.
• Transparency in insurance data, similar to the Home Mortgage Disclosure Act, is necessary.
  Because the products are required for car owners and homeowners, states have a responsibility to implement basic consumer protections like ensuring rate hikes are not excessive,” said Abe Scarr, Director of the Illinois Public Interest Research Group (PIRG) and the Illinois PIRG Education Fund. “And consumer protections like these have always been merited but are particularly important now with the dramatic increase in weather disaster.”

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].