Senate Claims Climate Drives Insurance Crisis; Industry Pushes Back

The Senate Budget Committee presented a study this week linking rising non-renewals in multiple states to climate change. Industry representatives, however, argue that extreme weather is only part of a broader issue.

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During the 90-minute hearing, titled "Next to Fall: The Climate-Driven Insurance Crisis is Here – And Getting Worse," Sen. Sheldon Whitehouse (D-R.I.) shared findings based on non-renewal data from 23 insurers covering 2018-2023. According to the report, the data shows that climate-related factors are driving higher non-renewal rates across states, not just in Florida, Louisiana, California, and Texas, but also in regions like the Carolinas, New England, and Hawaii.

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Whitehouse emphasized the immediacy of the issue. “The crisis is happening now, and it’s worsening,” he stated. The study revealed that while Florida leads in non-renewals, states like Texas surprisingly rank lower, dispelling assumptions about regional impact.

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Robert Hartwig, a University of South Carolina professor and former Insurance Information Institute president, countered the committee’s findings. He described the situation as a "dislocation" rather than a full-blown crisis. Hartwig attributed non-renewal trends to factors beyond climate, including inflation, legal challenges, fraud, and population growth.

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Jimi Grande, senior VP at the National Association of Mutual Insurance Companies (NAMIC), criticized the hearing, claiming it politicized the insurance industry’s challenges. Grande argued that a mix of extreme weather, economic pressures, and policy issues is driving up costs for both insurers and consumers.

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David A. Sampson, CEO of the American Property Casualty Insurers Association (APCIA), echoed these sentiments. He noted that inflation, overbuilding in risky areas, and legal system abuse significantly influence insurance affordability. He also highlighted that regulatory challenges contribute to market instability, often pushing consumers toward government-managed insurance pools.

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Whitehouse acknowledged a letter from the National Association of Insurance Commissioners (NAIC), which flagged potential data inconsistencies in the report. Still, he maintained confidence in the overall findings, stating no insurers had raised concerns during the data submission process.

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Independent insurance agent Ernest Shaghalian Jr. offered a sobering perspective from Rhode Island. He reported a 560% increase in non-renewals in coastal areas and highlighted the departure of key insurers from the state’s market. “The crisis lies with consumers who face dwindling options and soaring costs,” Shaghalian warned.

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To address these challenges, Shaghalian suggested that states mandate more advanced notice from insurers withdrawing from markets. He noted that insurers’ reluctance to accept premiums—even at elevated rates—indicates troubling trends.

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