Weekly Roundup: While Federal Moves Undermine U.S. Home Insurance Market, States Pursue Reforms
FOR IMMEDIATE RELEASE
February 20, 2025
Contact: contact@insurancefairnessproject.com
Weekly Roundup: While Federal Moves Undermine U.S. Home Insurance Market, States Pursue Reforms
Each week, the Insurance Fairness Project highlights the latest developments in the national climate-driven property insurance crisis. For more insurance updates, follow us on LinkedIn, X/Twitter, and Bluesky.
1/ DISMANTLING FEDERAL CLIMATE DATA WILL LEAD TO HIGHER PREMIUMS, SAY ACTUARIES: The American Academy of Actuaries is warning that the Trump Administration’s moves to dismantle the National Center for Atmospheric Research and outsource the government’s climate research supercomputer will pose a risk to the insurance market and lead to higher premium costs for consumers.
American Academy of Actuaries: Shutdown of the National Center for Atmospheric Research (NCAR)
“When the scientific foundation for understanding natural hazard risk is weakened, insurers must assume wider loss distributions and higher tail risk, which translates directly into higher premiums for consumers. Beyond price, the availability of insurance depends on insurers’ confidence in their ability to understand and manage risk.”
2/ PRIVATE FLOOD INSURANCE NOT FILLING THE GAP: While the public National Flood Insurance Program covers over 4.7 million policyholders and $1.3 trillion in coverage, the private market is growing, increasing 43% from $3.29 billion in 2016 to $4.7 billion in 2024. Despite the growth in private insurance, many homeowners still cannot afford or access the coverage they need.
Insurance Business: Booming private flood insurance hasn't solved America's coverage crisis
3/ L.A. WILDFIRE SURVIVORS SAY REGULATORS IGNORED COMPLAINTS ABOUT STATE FARM: A new Los Angeles Times investigation finds that many wildfire survivors and their representatives say the state insurance department provided little to no help in resolving complaints over how State Farm managed their claims.
The investigation also details the troubling matter of an Insurance Department veteran who criticized State Farm’s claims handling as “shoddy” and “shameful”. She then was subsequently disciplined by her supervisors after State Farm called the department to complain about her.
4/ MEANWHILE, WILDFIRE REFORMS ADVANCE IN CALIFORNIA AND ELSEWHERE: In the face of mounting consumer complaints and the struggles faced by wildfire survivors, California lawmakers are advancing a set of reforms co-sponsored by Consumer Watchdog.
The Insurance Coverage for Fire-Safe Homes Act (SB 1076) would ensure homeowners who make their homes fire-safe can obtain and keep home insurance.
The Fair Claims Practices and Transparency Act (SB 877) would require transparency and accountability in loss estimate documentation so homeowners can clearly see how their payout was calculated.
The Insurance Payment Accountability Act (SB 878) would strengthen existing prompt-payment insurance laws by imposing interest penalties when insurers delay issuing payments.
The Affordable Insurance and Recovery Act (SB 982) would authorize the Attorney General to take large oil and gas corporations to court for damages related to climate change fueled extreme weather disasters, like wildfires and flooding.
The Mortgage Forbearance Act (AB 1642) would establish statewide science-based standards for post-fire home testing and clearance.
Other states also see the need for wildfire reforms.
In Idaho, legislators are addressing the rise in cancelled policies due to wildfire risks with three bills. HB 562 doubles the cancellation notice period to 60 days; a second bill mandates annual notices detailing wildfire risk scores, high-risk reasons, mitigation actions, and available discounts; and a third proposes a Wildfire Mitigation Fund.
Negotiations on Oregon's SB 1540 will continue through the end of the 2026 legislative session. The bill requires carriers to incorporate wildfire mitigation into their risk assessment models and submit them to the Oregon Department of Consumer and Business Services for verification. Carriers who do not submit models must still offer discounts for implemented mitigation measures.
5/ WHAT’S AT STAKE IN DUELING FEDERAL HOUSING LEGISLATION: The U.S. Senate and House have each passed bills — “ROAD to Housing” and “Housing for the 21st Century,” respectively — that aim to address the housing crisis in different ways. But those bills need to be reconciled before they can become law. Zoe Middleton, Associate Director of the Just Climate Resilience program at the Union of Concerned Scientists, explains what’s at stake.
Union of Concerned Scientists: Risk or Resilience? Congress Can’t Miss Its Opportunity in Major Housing Legislation
The opportunity before Congress is enormous: housing policy shapes the trajectory of families, communities, and regional economies. [...] Coming up short on affordability and leaving resilience and climate realism out of the final legislative package to narrowly focus on building is a careless plan to kick the can down the road, locking communities and the broader economy into risk.
Resources
Insurance Fairness Project: Polling – Voters Want Their Government to Address the Property Insurance Crisis
Public Citizen and the Revolving Door Project: Mapping the Home Insurance Crisis
Consumer Federation of America: Overburdened: The Dramatic Increase in Homeowners Insurance Premiums and its Impacts on American Homeowners
Brookings Institution: Homeowners insurance in an era of climate change
Consumer Federation of America and Climate and Community Institute: Penalized: The Hidden Cost of Credit Score in Homeowners Insurance Premiums
Americans for Financial Reform and Public Citizen: Rising Property Insurance Premiums: The Uneven Risks to Household and Systemic Financial Stability
Climate and Community Institute (CCI): Insurers of Last Resort: Why Today’s FAIR Plans Need a Redesign to Address the Home Insurance Crisis
Center for Climate Integrity: How Big Oil is Fueling the Insurance Crisis And Why State Policymakers Should Act
Yale Law Journal: The Uninsurable Future: The Climate Threat to Property Insurance, and How to Stop It
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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.
