Robert Gordon, senior vice president of policy, research and international testified today before the House Financial Services Committee’s Subcommittee on Housing and Insurance. The hearing is entitled, “The Factors Influencing the High Cost of Insurance for Consumers.” The following statement may be attributed to Gordon:
“APCIA appreciates the Housing and Insurance Subcommittee for focusing on the factors impacting the insurance market and contributing to rising costs,” said Gordon.
“Our challenge is simple economics. Insured costs and exposures are escalating much faster than regulators are allowing insurers to increase rates.”
Average global natural catastrophe insured losses have nearly doubled over the last decade, mostly in the United States, which has already suffered more than 24 billion-plus-dollar weather events in just the first 8 months of 2023 – a new record.
“The number one driver of property losses has been the accumulation of asset values in high-climate-risk regions as more people are moving into buildings in areas with high hurricane and wildfire risk that have become more expensive to rebuild,” continued Gordon.
“Losses are also being driven by economic inflation, climate change, and legal system abuse.
“Insurance availability can be best improved by allowing competitive private markets to actuarially price risk according to expected costs, while reducing government rate suppression and policy form constraints. Insurance affordability is best addressed through improved mitigation and resiliency programs. APCIA members have been supporting dozens of climate mitigation and resiliency programs that can help reduce climate-related losses and make insurance more affordable,” said Gordon.
The Insurance Institute for Business & Home Safety has developed extensive building code improvements and new wildfire safety standards. APCIA also worked extensively with the Administration’s Wildland Fire Mitigation and Management Commission that just released additional recommendations on land-use management and mitigation.
Insurers are also supporting improved vehicle and highway safety standards, including reducing distracted and drugged driving and investing in better road infrastructure, particularly in high-risk neighborhoods.
“Insurers’ core business is protecting people and helping them recover from catastrophic losses to their homes, cars, and businesses. Insurers remain committed to our policyholders and American consumers. But insurance markets are facing very strong challenges that will require strong leadership to overcome. APCIA is ready and willing to work with state and federal regulators and policymakers on solutions,” concluded Gordon.
APCIA’s written testimony is available here.