On September 7th, 2024, Consumer Federation of America’s Director of Insurance Douglas Heller testified before the Senate Committee on Banking, Housing, and Urban Affairs on rising property insurance costs and the impact on consumers. In the testimony, CFA noted that failures we see in property insurance markets today are a result of several reinforcing factors, especially insurance companies’ ignoring climate risk for decades.

CFA stated that rate hikes by insurers and announcements to limit sales or coverage in certain areas are wrecking havoc on consumers. Two of the biggest drivers of premium increases and regional availability crises are the interacting effects of climate change and the exploding cost of risk transfer in the unregulated, global reinsurance market. To address affordability and availability, insurance regulators must focus on providing and incentivizing more investments in risk reduction and loss mitigation. And to stabilize the insurance market, regulators must incorporate mechanisms that supplement the unregulated reinsurance market, such as a public mega-catastrophe reinsurance facility.

Finally, rising insurance costs do not stem from consumer protection laws that provide regulatory oversight or legal accountability for bad actors in the insurance industry. These claims–that consumer protection laws are the problem–are inaccurate and harmful.