The US government is stepping away from its effort to collect data on home insurance prices and availability at the Zip code level as premiums soar and climate risks to property intensify. Instead, it will join in a collaborative effort with state insurance regulators.
When the Treasury Department announced in October 2022 its plans to collect such information through the Federal Insurance Office, it said detailed information on premiums and policy non-renewals and cancellations was needed to understand which geographical areas could be subject to “major disruptions” in insurance coverage due to climate change.
The insurance industry opposed the move, saying that collecting the data would be a huge drain on companies’ resources and manpower. Republicans in Congress agreed, and GOP members of the House of Representatives introduced a bill to eliminate the FIO.
Now, even though the agency had already asked and recently received permission from the Office of Management and Budget to make its own request for data, FIO will instead get data from state insurance commissioners — who regulate the private market — and their trade organization, the National Association of Insurance Commissioners.
States have the authority to request insurers’ data and can impose fines on companies that do not participate. In a press statement, NAIC said that more than 80% of the US property insurance market, by premium volume, would be covered by the information request.
A Treasury official said on a Thursday press call that the agency will end up with more data this way than if it acted on its own.
Officials said they would start receiving preliminary data this spring. The possibility of the data being made public is still under discussion, they said.
The consumer advocacy group Public Citizen said the move could leave the government with an incomplete picture of risk if disclosures are selective. “For financial regulators, comprehensive, granular data is key to understanding the localized and nationwide risks posed by impacts caused by climate change,” said Carly Fabian, an insurance policy advocate with the group. “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.”
Storms, floods and fires fueled by climate change have been upending the home insurance market in the US. As the risks mount, some insurers have stopped writing new homeowners policies in California, Florida and other states.
That has resulted in a huge transfer in liability from private insurers to state-created insurance programs. Currently, such “insurers of last resort” have over $1 trillion in exposure.
Even when private insurance is available, it is increasingly expensive. Twenty-five states saw double-digit increases in home insurance rates last year, largely due to insurers’ poor underwriting results, according to a January analysis by S&P Global.
The NAIC said it will be collecting more than 70 points of data at the Zip code level, with information going back five years. Among the data it will gather will be on policy non-renewals and cancellations; deductible sizes; and whether any mitigation discounts are offered to customers who protect their properties against extreme weather impacts.