Insurer inquiry hits a hurdle
A sweeping effort by state regulators to find out why homeowners insurance is so expensive and hard for customers to secure is already facing challenges, as some crucial states say they may opt out of the call for data.
The National Association of Insurance Commissioners, an umbrella group representing state insurance regulators, said March 8 that state agencies were asking insurers for detailed data on how they were treating their customers, including information about the kinds of coverage they offer in various ZIP codes, the recent history of claims payouts in those areas, the size of deductibles for insurance customers and their opportunities for discounts by fixing or upgrading parts of their homes. At the time, a top NAIC official said the goal was to “address the critical challenge of the affordability and availability of homeowners insurance and the financial health of insurance companies.”
The group said data requests would reach more than 400 insurance companies and offer insight into about 80% of all homeowners plans in the United States as measured by total insurance premiums. Some of the data would be shared with the Treasury Department to help it pinpoint where homeowners face the highest risks and living costs. State and federal officials called the effort a watershed moment for the insurance sector.
The request is the biggest and broadest request for information that insurance companies have had to face from a regulator in decades. Such granular data has never been collected on a national level.
But each state regulator can decide whether to participate in the data call, and some of the states where homeowners face the greatest risks of damage from severe storms and where insurance markets are most turbulent — such as Louisiana, Texas and Florida, where Republican politicians regularly balk at policies dealing with climate change — may either share limited data or opt out of the program entirely.
Regulators say that even without full participation, the program is still an enormous advancement in their quest to understand what is happening with homeowners insurance. But the states’ reluctance to participate could leave a significant hole in the picture regulators are trying to piece together about homeowners insurance markets across the country.
It could stymie their efforts to decide exactly how to deal with the tangle of problems, caused by inflation and increasingly severe weather driven by climate change, that have caused some major insurers to leave states such as Florida and California. In those places, and in others hit hard by
catastrophic events such as windstorms and wildfires, some homeowners unable to pay the rising costs of insurance have slashed their coverage.
“It makes no sense to leave out the 20% of the country with the significant climate risk and related consumer impacts or leave out the types of insurance impacting the most vulnerable consumers,” said Birny Birnbaum, an insurance expert who is the executive director of the Center for Economic Justice, a nonprofit focused on equal access to economic opportunity.
During a meeting Wednesday of the Federal Advisory Committee on Insurance, attended by Treasury officials, insurance industry representatives and state regulators, Birnbaum told attendees he feared that as many as 10 states would decline to share data.
Steven Seitz, director of the Treasury’s Federal Insurance Office, declined to name or discuss the states that were not participating, but said at the meeting that the data call was “a very positive first step on the data coverage.”
But Louisiana, Texas and Florida have already expressed a reluctance to participate in the effort, with Louisiana opting out completely.
Florida is weighing what information to share, according to a spokesperson.
Some information from states that have entirely opted out of the data call could still make its way to the umbrella group.
That’s because regulators in participating states, including Pennsylvania, are asking national brands that operate in their states, including State Farm and Nationwide, to share details about their homeowners plans wherever they are sold.
A spokesperson for the NAIC said the group did not plan to publish a list of participating states.