Setting the Record Straight Regarding the Treasury Press Release on Homeowners Insurance Costs

WASHINGTON - The following statement is in response to The U.S. Department of the Treasury's Federal Insurance Office (FIO) report "Analyses of U.S. Homeowners Insurance Markets, 2018-2022: Climate-Related Risks and Other Factors." The statement may be attributed to American Property Casualty Insurance Association (APCIA) President and CEO David A. Sampson.

"Homeownership costs are on the rise primarily because of inflation, especially the escalating costs of construction materials and labor, which have increased 37.4% over the last 5 years, compared to a 22.4% increase in the cost of homeowners insurance (according to the Bureau of Labor Statistics construction and homeowners insurance producer price index)."

"Homeownership costs have also been increasing because most new homes are being built in areas with a higher risk of loss due to natural catastrophes. California alone has built more than 2 million homes in areas at high or extreme wildfire risk without fully implementing corresponding improvements necessary to effectively mitigate wildfires."

"Insurance is still a relatively small percentage of homeownership costs compared to average property taxes, utilities, and mortgage loans."

"The National Association of Insurance Commissioners (NAIC) last November terminated its data-sharing with Treasury on the climate change report, warning that 'We would urge significant caution about producing any work product that relies on this flawed data set to avoid providing policymakers or the public with potentially misleading information about the health of the U.S. property insurance markets... [A]ny conclusions drawn from the FIO data set would also be incomplete and misleading.'"

"Unfortunately, Treasury's release provides an incomplete explanation about the affordability and availability of insurance. Insurance availability can be best improved by allowing competitive private markets to appropriately price risk according to expected costs, while reducing government rate suppression and policy from constraints."

"Insurance affordability is best addressed through improved mitigation and resiliency programs. APCIA and our members have been supporting dozens of climate mitigation and resiliency programs that can help reduce climate-related losses and make insurance more affordable."

"Insurers remain committed to our policyholders and American consumers. Insurers' core business is protecting people and helping them recover from catastrophic losses to their homes, cars, and businesses."