The recent report from the U.S. Treasury’s Federal Insurance Office (FIO) on homeowners insurance pricing and climate risks represents a step, though a small one, toward greater transparency in the industry. Released on January 14, the report, which examined data from throughout the United States, has been met with a mixed response from consumer advocates.
According to Douglas Heller, Director of Insurance at the Consumer Federation of America, while the FIO report is an improvement over previous efforts by the National Association of Insurance Commissioners (NAIC), it doesn’t provide all the data needed for a more detailed analysis. The FIO collaborated with the NAIC, which began collecting the data in March 2024. A U.S. Treasury press release stated that the NAIC shared a subset of its collected data with the FIO.
“The FIO report was certainly better than anything the NAIC has done with the data collection, as the NAIC has provided nothing to the public regarding the data,” Heller said in an email. “I appreciate and applaud FIO for the work they’ve done to help bring to light, in particular, the evidence that the insurance crisis is not just a coastal issue or a California issue but a countrywide issue.”
The FIO report highlighted several key findings, including:
- Homeowners insurance costs are rapidly increasing across the U.S.
- Homeowners in areas affected by significant weather events are experiencing substantially higher costs.
- Policy non-renewals are more common in regions with elevated projected climate risks.
- Climate change is making insurance operations more expensive for providers.
The NAIC gathered data from more than 330 private homeowners insurance companies nationwide for the report. The FIO’s report provides an overview of costs, availability, and regional variations in costs and availability. Its estimates of climate-related disaster costs are based on the Federal Emergency Management Agency (FEMA) National Risk Index (NRI), which takes into account cold waves, hail, heatwaves, hurricanes, lightning, strong winds, tornadoes, wildfires, and winter storms, but not flooding, as most insurers exclude flood coverage. The report also includes analyses of insurers’ losses, insurance expenses, and factors impacting policies and premiums, with regional differences organized by ZIP codes.
However, the report’s incompleteness restricts the ability of independent researchers to perform detailed analysis.
“I continue to be frustrated by the unwillingness of FIO and, much more so, the NAIC to make all the data public,” Heller stated. “Neither FIO nor the NAIC have the bandwidth or breadth of perspective to do all the useful analyses that even this limited data call makes possible. There is absolutely no justification for protecting the insurance industry from the scrutiny of its underwriting and pricing that would happen if the data were available. There is no company trade secret in ZIP code aggregated data.”
