Homeowners pay price for insurance industry’s reluctance to address climate change, consumer groups say

The insurance industry's continued embrace of fossil fuel projects is worsening climate change, which ultimately hits consumers in the form of higher premiums for homeowners insurance, consumer groups said Wednesday.The four organizations — U.S. PIRG, Consumer Federation of America, Americans for Financial Reform and Public Citizen — blasted the insurance industry on the same day lobbyists for the American Property Casualty Insurance Association were on Capitol Hill for their annual "Legislative Action Day."The association, with offices in Chicago and Washington, D.C., represents home, auto and business insurers.The consumer groups criticize the insurance industry for underwriting oil and gas expansion projects and investing consumers' premium dollars in fossil fuel companies. Then, when climate change causes more frequent and severe weather events such as tornadoes, hurricanes and wildfires, the insurers raise customer premiums to pay for the billions of dollars in claims paid out.Illinois saw the in the nation from 2021 to 2024, rising about 50% to an average of $2,942 for $350,000 in replacement coverage for a typical homeowner, according to a report last month by the Consumer Federation of America.The average homeowners premium jumped 46% in the Chicago metro area over the same period."The insurance industry has a choice. It can continue to fuel the crisis, or it can help solve it," said Mike Litt, consumer campaign director for PIRG's Education Fund.Recently released data from Public Citizen shows an increase in nonrenewal rates of homeowners insurance, not only along the coasts but also in parts of the Midwest, which could indicate that companies are restricting coverage or consumers can't afford the higher premiums, said Carly Fabian, senior insurance policy advocate for Public Citizen.Dropping insurance could violate a homeowner's mortgage terms and lead to foreclosure. If a person owns a home outright but drops their insurance because it's too expensive, they're left financially exposed if a weather disaster happens."Many consumers are already reaching a breaking point," Fabian said.

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More expensive homeowners insurance harms low-income communities the most, as it stifles the development of affordable housing, the consumer advocates said.The rising insurance rates come as President Donald Trump's administration is rolling back efforts to address climate change, including withdrawing from the Paris Agreement and pausing wind power development.The administration early this year announced the Treasury Department's Federal Insurance Office would withdraw from an international coalition of central banks and financial supervisors that works on mobilizing finance for green energy projects and managing climate risk in the financial sector.And it's slashing funding for the National Oceanic and Atmospheric Administration, which conducts weather and climate research, including data collection and modeling to help people understand and address climate change risk.The problem of rising homeowners insurance costs goes far beyond coastal states hit by devastating hurricanes, with Midwestern states like Illinois experiencing damage from more frequent and severe thunderstorms and wind storms, the consumer advocates say.Some insurers have adopted restrictions on underwriting coal projects. Generali Group, based in Italy, received praise for its pledge to leave the coal sector in 38 countries by 2030 and worldwide by 2040.But rather than go all in on cleaner energy, the U.S. insurance industry has pushed for better wildfire prevention and for communities to focus on resilience to climate change.Dave Snyder, vice president of the American Property Casualty Insurance Association, said while its members handle their own investments, "on average, property casualty insurers have recently held a low single-digit percentage of their investments in energy-related assets."Snyder said insurers "play an important role" by making sure their underwriting processes for energy projects require attention to "safety, loss control, risk identification and mitigation controls.""Property casualty insurers have been longtime leaders in addressing the impacts of climate change by advocating for stronger mitigation, resilience efforts and building codes," Snyder said.He added that while climate change is contributing to higher insurance losses, there are bigger factors at play like more expensive construction materials and labor.Fabian said state insurance regulators need to pay more attention to climate change, pointing to a recent list of legislative priorities issued in March by the National Association of Insurance Commissioners that talked about "community-based resilience and mitigation efforts" for "natural catastrophes" but did not mention climate change."How are they going to solve the issue if they can’t even use the word?" Fabian said.