Whitehouse Statement on New Treasury Report Confirming Climate Change-Driven Insurance Affordability, Availability Crisis

ICYMI: New Data Reveal Climate Change-Driven Insurance Crisis is Spreading

ICYMI: Whitehouse Launches Investigation into Climate Change-Fueled Insurance Crisis

Washington, D.C.-Senator Sheldon Whitehouse (D-RI), Ranking Member of the Senate Committee on Environment and Public Works, issued the following statement in response to the U.S. Department of the Treasury's Federal Insurance Office (FIO) releasing new data and an accompanying report on climate-related risks to insurance markets. The FIO's report follows a major investigation into the climate change-driven crisis in homeowners' insurance that the Senate Budget Committee conducted during the 118^th Congress under then-Chairman Whitehouse. That inquiry resulted in a first-of-its kind public dataset and accompanying staff report that made publicly available-for the first time-an accounting of insurance non-renewals at the county level from all 50 states and the District of Columbia from 2018 through 2023.

Climate change has not only made insurance more expensive for American families but has also made insurance increasingly unavailable, threatening homebuyers' ability to secure mortgages. The inability to obtain a mortgage limits the pool of potential buyers to those who can pay cash, leading to a crash in property values and increasing the risk of an economy-wide catastrophe, like the 2008 financial crisis.

"What Treasury's report and the Senate Budget Committee's report last Congress make clear is that climate change is not just about polar bears and melting icebergs anymore; it's also driving up prices and fueling an insurance affordability and availability crisis," said Ranking Member Whitehouse. "Whether it's families having their policies canceled by insurance companies, skyrocketing premiums forcing families to drop coverage, or insurers pulling out of markets altogether, there should be no more doubt that climate change is one of the biggest financial risks to Americans today. Climate change is not only making life's essentials more expensive but also setting in motion a risk of cascading failures-from the insurance market to the mortgage market to a property values collapse-that ends in economy-wide catastrophe. If we are to stave off the worst of the worst harms, we must make major progress toward eliminating the carbon pollution that is the root cause of it all. I am encouraged that Treasury has made public a subset of its data, and I urge FIO to release all data underlying its report."

The Senate Budget Committee's investigation last Congress sought documents and data from 41 insurance companies concerning non-renewals. Insurance industry experts have warned that spiking non-renewal rates, even if still low in absolute terms, are often an early sign of market destabilization. The Committee obtained national, county-level non-renewal data from nearly two dozen companies that collectively account for about 65 percent of the national homeowners' insurance market. The data covered 249 million total insurance policies over the six-year period beginning in 2018 and ending in 2023.

The latest Treasury data was collected through a first-of-its-kind effort by the FIO working with the National Association of Insurance Commissioners and state insurance regulators. The data covered more than 330 insurers on more than 246 million homeowners' insurance policies that were aggregated to the ZIP Code level and cover the years 2018 to 2022.

While the data analyzed by the Senate Budget Committee and Treasury represent substantial portions of the homeowners' insurance market, the respective datasets are not identical. In particular, Treasury's data does not include information from insurance companies headquartered in seven states that declined to participate in NAIC's data call, including Florida.

Nevertheless, both Whitehouse's investigation and the new Treasury data confirm that:

• Climate change is driving increasing non-renewal rates. The data show that the states and counties most exposed to climate-related risks, like wildfires or hurricanes, are among those with the highest non-renewal rates and the highest growth in non-renewal rates.
• Insurance non-renewals are not exclusively a problem for communities typically seen as being on the front lines of climate change. Coastal communities have been seen as the canaries in the coal mine, but data make clear that inland communities affected by phenomena such as wildfires and hail are not far behind.
• Across the United States, insurance costs are rising and there is a clear positive correlation between rising non-renewal rates and rising premiums-and a similar correlation between annual premium rate changes and non-renewal rate percentage changes over time-demonstrating that climate change has become a major cost-of-living issue for families across the country.

Background on Whitehouse's Investigation

Last Congress, Senator Whitehouse, then-Chairman of the Senate Budget Committee, held a series of hearings to expose the systemic risks climate change poses to the U.S. economy and the federal budget. Central bankers, economists, insurance industry executives, financial experts, academics, state and local leaders, and others have warned that sea level rise and more intense storms could make more than $1 trillion in coastal real estate uninsurable, and therefore unmortgageable; that more frequent and intense wildfires could result in a similar death spiral for Western property values; and that climate-related losses are making it harder for the insurance industry to price risk, which has already led to skyrocketing premiums and growth in non-renewals.

Given the economy-wide harms from widespread uninsurability, the Senate Budget Committee in the 118^th Congress launched an investigation into the 20 largest private-sector insurance companies in California, Louisiana, Florida, and Texas-a total of 41 companies-to request national non-renewal data as well as documents and information related to the companies' plans to address increased underwriting losses from climate disasters.

The Committee sent letters to American International Group, Allied Trust, American Integrity, Allstate, American Family, AmTrust, Applied Underwriters, Auto Club Enterprises, AXA, Berkshire Hathaway, Chubb, CNA, CSAA, Fairfax, Farmers, Florida Peninsula, First Protective, Gulf States, Hartford, Heritage, Homeowners of America, Homeowners Choice, Kemper, Louisiana Farm Bureau, Liberty Mutual, Mercury General, Nationwide, Olympus, People's Trust, Progressive, Security First, Shelter Mutual, Slide, State Farm, SURE, Tokio Marine, Tower Hill, Travelers, Universal Insurance Holdings, USAA, and Zurich.

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