American Property Casualty Insurance Association: Consumer Federation of America's Latest Study Demonstrates They Do Not Understand What is Driving Dramatic Cost Increases in the Homeowners Market

CHICAGO, Illinois, April 2 -- The American Property Casualty Insurance Association issued the following statement on March 31, 2024:

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The following statement from the American Property Casualty Insurance Association (APCIA) is in response to a webinar held by the Consumer Federation of America that contained misinformation. The following statement can be attributed to David Snyder, APCIA vice president international.

"The Consumer Federation of America's (CFA) latest study demonstrates that they do not understand what is driving the dramatic cost increases in homeowners insurance claims and costs. Multiple studies show the primary cost drivers are the increase in exposure values in high-climate-risk areas and the increased inflation in the cost of building replacement costs and other insurance inputs. Climate change and natural weather variability are additional secondary factors contributing to increasing natural catastrophe losses.

"The reality is the significant and rapid onset of severe inflation has driven up the cost of every part of a homeowners insurance claim. While year-over-year inflation trends have moderated, the cumulative impact of inflation since the COVID-19 pandemic has increased the cost to repair and rebuild homes over 40 percent.

"CFA showed no evidence that insurance premiums are arbitrary and do not reflect the increased losses insurers are paying for. Every insurance regulator is provided with data that shows the increasing cost of claims. While climate change is contributing to increased natural catastrophes adding to insurance costs, historic inflation for labor, materials and rent, litigation abuse and more population moving into higher risk areas are what is actually driving up insurance costs and therefore premiums.

"There is also no evidence that insurance costs are a major factor in housing issues. Those issues arise out of the economics of that sector, insurance costs are a tiny part and are based on risk. We do not determine what is built, where or how it is priced. Those are the real issues with housing.

"Insurers are actively trying to lower risk and costs by promoting mitigation at the individual property and community level. Until we lower risk, exposure and claims costs, policyholders and businesses will continue to face higher premiums. We should not waste time on the blame game and look for solutions that will fix the disrupted markets and work together to mitigate properties, lower risk and prevent more losses."

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The American Property Casualty Insurance Association (APCIA) is the primary national trade association for home, auto, and business insurers. APCIA promotes and protects the viability of private competition for the benefit of consumers and insurers, with a legacy dating back 150 years. APCIA members represent all sizes, structures, and regions--protecting families, communities, and businesses in the U.S. and across the globe.

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Original text here: https://www.apci.org/media/news-releases/release/79597/