Insurance

Consumer Groups Applaud the Federal Insurance Office for Pushing State Insurance Regulators to Start Collecting Data About Property Insurance Markets and Climate Risk

 |  Press Release

Washington, D.C.—The nation’s leading insurance consumer advocacy organizations, Consumer Federation of America (CFA), the Center for Economic Justice (CEJ), and Public Citizen today thanked the U.S. Department of the Treasury’s Federal Insurance Office (“FIO”) for successfully pushing state insurance regulators to start collecting the insurance company data needed to monitor property insurance markets after years of inaction at the National Association of Insurance Commissioners (“NAIC”). The data to be collected will help answer critical questions about the nation’s homeowners market, including:

  • How are insurers reducing or eliminating coverage in response to growing climate risk?
  • What regions and communities are seeing the greatest premium increases and reductions in coverage as insurers shift risk onto consumers with coverage exclusions, higher deductibles, and other opaque actions?
  • How are insurers’ underwriting and pricing responding to climate risk?

The consumer groups were responding to today’s NAIC announcement that it will begin data collection from insurers to assess insurers’ response to growing climate risk and rising insurance costs.  The NAIC action came nearly 18 months after the FIO announced its intention to collect such data from insurers in the absence of any relevant data from state insurance regulators.  After criticizing the FIO for its data collection effort, the NAIC was spurred into action to avoid further embarrassment.

Unlike regulators for other financial services, state insurance regulators have refused for decades to collect the granular consumer market outcome data needed to monitor the availability and affordability of auto and home insurance, the groups noted.  State insurance regulators today cannot answer basic questions about what is happening in their insurance markets because they haven’t collected the relevant data.

“It is clear that absent the FIO effort to address the gaping holes in state insurance market monitoring, the insurance regulators would have continued to do nothing to modernize data collection for market regulation,” said Birny Birnbaum, longtime consumer representative at the NAIC and director of the CEJ who is a member of the Federal Advisory Committee on Insurance that advises the FIO.  “FIO has demonstrated the wisdom of Congress, which created the agency as a key post-financial crisis reform with the mandate and tools to monitor the industry and identify gaps in state insurance consumer protection.”

“There is a growing homeowners insurance crisis across the country, and the NAIC has been far too slow to act,” said Douglas Heller, CFA’s Director of Insurance. “As an example, in January of 2024 NAIC updated its annual homeowners insurance report and the most recent data are insurance premiums from 2021. Getting the data call that FIO has prompted – and then expanding it in years to come – is critical to reforming the insurance markets that are wreaking havoc on families and businesses.”

Bob Hunter, CFA’s Insurance Director Emeritus and former Texas Insurance Commissioner, said that “during 40 years of work helping consumers of insurance, I have observed that the NAIC, which normally avoids taking action needed to protect consumers, suddenly becomes ‘brave’ at moments like this, when they fear the federal government is about to do what they should have been doing all along.”

“While anecdotal data, voluntary industry surveys, and data from last-resort programs have effectively raised the alarm, these have not painted a full picture, and selective disclosures from insurers can just as easily be used to exploit a crisis as they can to solve it,” said Carly Fabian, Insurance Policy Advocate at Public Citizen. “The success of the NAIC’s efforts, and Treasury’s reliance on them, hinges on an accessible data source that is updated regularly with data from every state.”

While praising the new data collection effort, the consumer groups also noted that it is limited in scope.  Despite evidence from the country about condominium associations, cooperatives, and affordable rental housing developers seeing few insurance choices and massive premium increases, the data call will not capture anything about the most vulnerable portions of the market. The NAIC should commit to expanding future data collection to better understand the impact of climate risk on Americans beyond those who live in single family homes, the groups said.