Senate Committees to Probe Insurers
November 6, 2023
On November 1, a Senate committee launched an investigation to determine how insurance companies plan to cover escalating losses related to climate-related perils.
What they’re saying: Senate Budget Chair Sheldon Whitehouse (D-R.I.) and Sen. Ron Wyden (D-Ore.) sent letters to 41 companies in California, Louisiana, Florida, and Texas, noting that:
- As climate-related risks increase, insurance premiums will rise; insurers will pull out of at-risk markets; and property values in affected markets will decline;
- Insurance unavailability will cause affected properties to become “un-mortgageable”; and
- A widescale decline in property values would present a systemic risk to the U.S. economy.
The senators asked for responses to several questions by Nov. 17, including:
- Are insurers considering climate-driven effects when calculating their premiums or making market decisions; and
- Have "climate-related losses threatened their solvency."
They also requested information on climate modeling, premium forecasts, and jurisdictions where policies were not renewed.
Yes, but: On November 2, the House Financial Services Committee’s Subcommittee on Housing and Insurance held a hearing entitled “The Factors Influencing the High Cost of Insurance for Consumers” during which Chair Warren Davidson stated that the insurance industry should remain “free from the involvement and clutches of meddling federal bureaucrats.”
Relevant legislation referenced during the hearing included:
- H.R. 5535, the Insurance Data Protection Act - would restrict the ability of the Federal Insurance Office (FIO) of the Department of the Treasury and other financial regulators from collecting data directly from insurance companies via subpoena, and ensure the confidentiality of any data collected from insurance companies;
- H.R. 2933, the Federal Insurance Office Elimination Act - would eliminate FIO within the Department of the Treasury and remove the FIO director as a nonvoting member of the Financial Stability Oversight Council;
- H. Res. ___, expressing the continued support of Congress for the McCarran-Ferguson Act and its State-based regulatory system for the business of insurance - would affirm Congress’ support for the McCarran-Ferguson Act and its state-based regulatory system for the business of insurance as the law of the United States; and
- H.R. __, the Wildfire Insurance Coverage Study Act - would require GAO to conduct a study relating to insurance coverage for damages related to wildfires.
However, on November 3, the FIO provided public notice on its intent to proceed with data collection from insurers to assess climate-related financial risk to consumers across the U.S. and advance “the proposal for data collection that FIO published in October 2022.”
FIO also noted that upon review of comments from “numerous stakeholders, including the National Association of Insurance Commissioners (NAIC) and state insurance regulators” it has “streamlined and refined its data collection request.”
CREFC, via its Sustainability Initiative, has launched an Insurance Working Group to explore increasingly critical issues in the property/casualty insurance space. Please contact Sairah Burki at sburki@crefc.org with any questions.