Weekly Roundup: Gulf Coast Insurance Crisis Sets the Stage for a Brutal Hurricane Season; California Insurer Scrutiny; Transparency Progress in Colorado
FOR IMMEDIATE RELEASE
May 30, 2025
Contact: contact@insurancefairnessproject.com
Weekly Roundup: Gulf Coast Insurance Crisis Sets the Stage for a Brutal Hurricane Season; California Insurer Scrutiny; Transparency Progress in Colorado
Each week, the Insurance Fairness Project highlights the latest developments in the national climate-driven property insurance crisis.
GULF COAST SPOTLIGHT: A new Insurance Fairness Project report examines the escalating crisis along the Gulf Coast, as insurers pull out of risky markets and premiums spike in Louisiana, Florida, Texas, and Georgia. Coverage:
Insurance Business Magazine: Insurance crisis deepens in Gulf states
Florida Trend: Daily Pulse, Insurance crisis deepens in Gulf states
THIS WEEK IN SHORT:
> States already in the throes of a national insurance crisis are bracing for the start of the Atlantic hurricane season on Sunday, with 18 severe storms projected — half of which will become hurricanes that bring storm surge, flooding, damaging winds, and more. And after deep FEMA and NOAA cuts, tens of thousands of families can’t expect the federal help they’ve counted on in the past when disaster hits.
> Meanwhile, California insurers continue to face scrutiny for alleged collusion, underinsurance, and arbitrary cancellations, with major repercussions for homeowners.
> But we also saw a big win in Colorado, where Gov. Jared Polis signed a bill requiring insurers to disclose their risk-based pricing models — which could help ensure resiliency investments pay off through lower premiums.
SEE BELOW FOR MORE DETAILS:
1/ Homeowners impacted by hurricanes this season can expect an especially rough financial hit. And an intentionally weakened FEMA is poised to make a bad situation worse along the Gulf Coast.
“A new hurricane season is approaching, and so are new questions about homeowners insurance in Florida. [. . .] ‘Agents are great at trying to find ways to reduce premiums when people are upset with their price, but there's this absolute disconnect between agents and policyholders about what their policy covers.’"
“Congress [has] looked at the question of how to revise or reform FEMA, including … things like how the National Flood Insurance Program works or how FEMA tries to strengthen building codes. There's a lot you can do to reduce people's exposure and vulnerability to disasters. Typically, Congress has been reluctant to play that role...”
More: FEMA at 'high risk' of disrupting 'life-saving' disaster relief, per internal memo; Trump's plan to cut FEMA disaster relief could hurt Florida
2/ Meanwhile, allegations that California insurers are manipulating policyholders and colluding to raise revenues are seeing renewed scrutiny.
Los Angeles Times: Did insurers collude to force homeowners onto state insurance plan? What to know from two blockbuster lawsuits
“The litigation claims that the collusion and boycott were carried out through meetings of the FAIR Plan’s governing committee and subcommittees, as well as weekly meetings of the Personal Insurance Federation of California and the American Property Casualty Insurance Assn. [. . .] [L]ast year, insurers won the right from Insurance Commissioner Ricardo Lara to surcharge their own residential and commercial policyholders if the FAIR Plan runs out of money — which it has since the fires. One of the lawsuits cites the new policy as evidence of the insurers’ “determination to act collusively.”
San Francisco Chronicle: California hearing probes solutions to underinsurance
“Daily, insurance companies are handing estimates to their clients that are materially misleading and saying ‘check it out.’ … I think that’s simply fraud,” Matt Everson, a construction expert who is working with hundreds of Los Angeles wildfire survivors, told board members Wednesday… [State Board of Equalization] Vice Chair Sally Lieber called for the hearing in response to a Chronicle investigation that exposed the prevalence of underinsurance in the state and identified the role that insurance companies’ use of flawed algorithms play in leaving homeowners without enough insurance coverage to rebuild.”
ABC7: Bay Area insurance agent alleges Farmers issued questionable cancellations: 'I want the truth out'
“As tens of thousands of California consumers get dropped by their insurance company, 7 On Your Side is investigating a new concern raised by a local Farmers Insurance agent -- what happens if you get a letter claiming you canceled your policy when you really didn't?
"Is this the new normal?" said Jeffrey Carvalho, a Fremont-based Farmers Insurance franchise owner. "They need to stop it."
3/ The Colorado bill shows transparency is one way forward.
Gov. Jared Polis signed HB 1182 into law this week. The Risk Model Use in Property Insurance Policies law will require insurers to provide more information about how they set their rates based on risk. That won’t just help regulators enforce fair risk modeling and pricing; it will also help policyholders and communities understand how to lower rates by investing in resilience upgrades like stronger roofs. Upgrade programs work; they’ve already lowered rates in Alabama and are being tried in Louisiana.
Our statement: “Coloradans have been calling on their government to address the home insurance crisis, and today state leaders responded with a good first step. Insurers have been leaving Coloradans in the lurch with higher premiums and canceled policies, making it harder for people to protect themselves from extreme weather and wildfires. If it works as intended, this law should help regulators hold the insurers more accountable and protect consumers from industry abuses.”
Resources
Insurance Fairness Project and Data For Progress: Polling – Voters Want Their Government to Address the Property Insurance Crisis
78% of voters are concerned about rising property insurance prices, with 40% saying they are “very concerned”
Public Citizen and the Revolving Door Project: Mapping the Home Insurance Crisis
New interactive maps reveal the widespread nature of the U.S. home insurance crisis with seven metrics of availability and affordability.
Consumer Federation of America: Overburdened
The Dramatic Increase in Homeowners Insurance Premiums and its Impacts on American Homeowners
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The Insurance Fairness Project is an information hub dedicated to offering insights into the home insurance crisis, exploring its drivers and highlighting solutions alongside issue experts and community advocates.
