Capitol Hill joining in
The U.S. Senate’s Budget Committee is joining the Treasury Department’s Federal Insurance Office in demanding climate information from property insurance companies and how those companies use it to determine the cost and availability of coverage. The Treasury last week took the next step to prepare its proposed data call of companies for some of the same information.
We’ve been reporting for two years on the nearly 20 property insurance companies that have reduced their policy offerings in Florida. Last May, State Farm Insurance announced it would no longer sell homeowners coverage in California, in part due to increased wildfires. Last week the U.S. Senate Budget Committee sent letters to 41 of the nation’s largest insurance companies wanting to know where those carriers have dropped or plan to drop customers. The committee wants the information by November 17 or otherwise could consider subpoenaing it.
Senator Sheldon Whitehouse
“Climate-caused uninsurability has the potential to trigger cascading failures that undermine our entire economy,” Senator Sheldon Whitehouse, Democrat of Rhode Island and the committee chairman, said in a statement. “With this investigation, we are seeking information about where the dominoes may fall next.”
The New York Times reports the committee’s letter went to the largest insurance companies in California, Texas, Florida, and Louisiana, asking them to explain how they use climate modeling data to gauge risk, and what that data says about the areas where those insurers do business. The letter requests “all documents related to your company’s deliberations concerning climate-related losses and solvency.”
Meanwhile, the Treasury Department’ Federal Insurance Office (FIO) last week announced it was moving forward with the second step of its effort for a first-ever data call of property insurance companies to assess climate-related financial risk to consumers. According to its press release, FIO’s data collection will seek previously unavailable insurance data at a zip code level “on a consistent, granular, and comparable basis” from the largest homeowners insurance companies that collectively cover 70% of homeowners premiums nationwide. We reported this was coming and the concerns expressed by the insurance industry and both of Florida’s US Senators in our July 10, 2023 LMA Newsletter.
FIO said that in 2022, insurance covered only 60% of the $165 billion in total economic losses from climate-related disasters and impacting millions of Americans. The data call “will provide critical information at a local level to assess the increasing impacts of climate change on household budgets,” said Treasury Secretary Janet Yellen in the release. “The resulting data and analyses will help policymakers inform potential approaches to improving insurance availability and affordability for consumers.”
FIO has submitted its data call request to the Office of Management and Budget for approval and public comment.
LMA Newsletter of 11-6-23
