State's insurance chief urges storm-proofing

Homeowners will be encouraged to strengthen their roofs, fireproof their siding and install sump pumps under a new national plan to protect against climate disasters spearheaded by Connecticut's insurance chief.

The first-ever National Climate Resiliency Strategy for Insurance was released on April 5 by Andrew Mais, who heads both the National Association of Insurance Commissioners and Connecticut's Insurance Department.

"The goal of a strategy is to drive faster and more effective risk reduction by state insurance regulators to ensure that insurance continues to be available and reliable as communities across our nation face climate risk," Mais said at a news conference last week where he announced the plan. "We must work to reduce our risk and then allow the economic power of insurance to focus on the risks that can be mitigated."

The new national effort is aimed at both homeowners and state insurance departments, encouraging all states to take proactive measures to lessen the financial toll of ever-stronger storms, fires, floods and droughts.

"We are all in this together and we all need to succeed, that's why it's important for us to have a united climate resiliency approach," said California Insurance Commissioner Ricardo Lara, whose state has been devastated by wildfires.

Regardless of politics, states need to work together to ensure that homeowners protect their homes and get coverage if disaster hits, said Commissioner Lori Wing-Heier of Alaska, which experienced its first-ever typhoon in 2022.

"We stand with our colleagues from East Coast to West Coast and beyond in addressing the availability and affordability of insurance for consumers," Wing-Heier said. "These storms, these wildfires, they don't know political boundaries."

Part of the new resiliency plan includes a pledge to find federal funding to help homeowners make their property more disaster-resistant, which could help lure insurance companies back into markets where they have suffered catastrophic losses, Wing-Heier said.

"Hardening" efforts and changes in zoning codes could draw insurance companies back into disaster-prone areas, such as Florida and coastal California, which have seen insurers pull out of the market.

"We need to incentivize consumers through a whole host of different thoughts and programs to do the home hardening, to buy that policy that we're going to protect our communities," Lara said.

Connecticut property and casualty insurance losses hit a new high of $6.4 billion in 2022, with totals rising for a fourth consecutive year due to intensifying storms and higher construction costs for rebuilding after a disaster.

Due in part to the rising bills for storm damage, Connecticut homeowner insurance rates could rise by 9 percent on average this year, according to a recent analysis by Insurify, an online insurance marketplace.

For 2023, the state Insurance Department approved a 9.6 percent average rate increase for the 130 homeowners insurance carriers it oversees. The carriers had asked for an 11.1 percent average hike in premium rates.

Under Mais, Connecticut has hosted three national conferences on how climate change impacts the regulation, cost and availability of insurance.

Even as the state takes leadership on the issue from a policy side, Connecticut's major property and casualty insurers continue to draw criticism from climate activists for underwriting fossil fuel companies and investing in industries with large carbon footprints.

Mais said the new resiliency strategy was not aimed directly at insurers, but the national commissioners group planned to continue efforts to collect data from companies to enhance regulatory efforts.

More than 400 insurers representing more than 80 percent of the market are participating in a recently launched NAIC "data call" by providing information on premiums, policies, claims, losses, limits, deductibles, non-renewals and coverage types at the zip-code level. That data will also be shared with the U.S. Treasury's Federal Insurance Office, which is probing the impact of climate change on the industry, Mais said.

Insurance companies have pushed back on the data calls, arguing against the disclosure of what has long been proprietary information, and the effort involved.

"We wanted to get more data so we could better understand not just what is happening nationally, but what is happening in every state," Mais said. "We need that in order to properly regulate the market."