What to do about skyrocketing insurance premiums? Senators have divergent views [The Advocate, Baton Rouge, La.]

Sep. 7—WASHINGTON — Better state regulation and more federal involvement is necessary to slow the surprising increase in the cost of homeowners' insurance, consumer advocates argued Thursday to a Senate committee looking at the impact of climate change on property insurance premiums.

No, countered supporters of the insurers, the goal should be to ratchet back unnecessary regulation and make it harder for homeowners from suing companies when dissatisfied with how their claims were handled.

Jerry Theodorou, who spent the past 15 years working as an analyst for the property and casualty insurance industry and now serves as policy director for insurance at the R Street Institute, added that what the public really needs is an education on how insurance works.

"Yeah, they know how it works. It's called write a check and then you have to sell blood plasma to go to the grocery store," said U.S. Sen. John N. Kennedy, who had quizzed the experts on what they thought Congress should do about skyrocketing home insurance premiums. The Madisonville Republican is a member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

Experts who testified before the committee said that home insurance premiums are up an average of 26.4% nationwide pver the past few months and by as much as 120% in some markets.

Only Florida homeowners, who pay an average of $4,200, have higher premiums than Louisiana, whose consumers pay an average of $2,038. The national average is $1,331, according to the the R Street Institute, a policy think tank that describes itself as center-right politically.

Jerry Theodorou testimony to Senate Banking committee, Sept. 7, 2023

At least five large U.S. property insurers have stopped taking new customers, telling regulators that extreme weather patterns is the reason. Companies in some regions are selling more expensive policies that cover less and have higher deductibles.

U.S. Sen. Sherrod Brown, the Ohio Democrat who chairs the committee, said the situation is fast becoming a crisis, causing homeowners to spend dollars they can't afford or being forced to pay higher mortgages to cover insurance forced on them by their financiers, or dropping out of homeownership.

"Increasingly homeowners are facing an unpleasant surprise," Brown said. "When it is time to renew their policies they are hit with higher costs or no coverage as insurers are leaving markets altogether," adding that storms are stronger and more frequent than they have been.

The National Oceanic and Atmospheric Administration counted 15 weather disasters, each costing at least $1 billion, this year. And it's no longer just high-intensity hurricanes. From wildfires in Hawaii to flooding in Vermont, disasters have cost $34 billion in the first six months of 2023, Brown said.

Some of the highest insurance premiums are now being charged in Midwest communities that are experiencing more tornados, heavy rains and hailstorms, testified Douglas Heller, director of insurance at the Consumer Federation of America, a Washington-based advocacy organization.

Heller testimony to Senate Banking committee, Sept. 7, 2023

In addition to more disasters, insurance companies are also having to pay about 50% more for reinsurance, the policies they buy to mitigate their own losses during a catastrophe. It's an unregulated market, Heller said. In most states, including Louisiana, insurers are allowed to pass along to consumers the increased costs of reinsurance.

The federal government should start selling reinsurance to help keep prices stable, said Michelle Norris, executive vice president of National Church Residences, a national group based in Columbus, Ohio, that provides income restricted and senior living apartments around the nation.

Norris and Heller also said the government should spend more to help owners make their homes more resilient, so they'd have less damages insurers would have to cover.

U.S. Sen. Thom Tillis, R-N.C., said the crisis was better dealt with on a state level by state regulators. "There is a way to fix this problem, but I don't think there's a federal government solution to the problem," Tillis said.

Theodorou of the R Street Institute agreed with Tillis.

"The push to introduce some sort of federal backstop or support, however well intentioned, would backfire, because contrary to popular opinion, the reinsurance market and the primary insurance industry is not on its knees," he said. "It's not collapsing."

But Sen. Elizabeth Warren, D-Mass., said senators had no way of knowing about the health of the insurance industry because insurers and state regulators have refused to provide information requested by President Joe Biden about the impact of climate change on the industry.

"Insurers and state regulators are pushing back on this. They say that collecting this data is unnecessary, ill-advised and burdensome," Warren said.

"It's one of the reasons why the market crisis we're talking about feels so sudden," Heller said, "because we haven't been collecting this data that would have given us the chance to prepare."

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