Every American who has a mortgage is required by their bank to have homeowners insurance, but getting it and keeping it is becoming a challenge. In this episode, hear the highlights of a Senate hearing examining the problems in the homeowners insurance market and why they might lead to much bigger problems next time disaster strikes. Please Support Congressional Dish – Quick Links Contribute monthly or a lump sum via PayPalSupport Congressional Dish via Patreon (donations per episode)Send Zelle payments to: Donation@congressionaldish.comSend Venmo payments to: @Jennifer-BrineySend Cash App payments to: $CongressionalDish or Donation@congressionaldish.comUse your bank’s online bill pay function to mail contributions to: 5753 Hwy 85 North, Number 4576, Crestview, FL 32536. Please make checks payable to Congressional Dish Thank you for supporting truly independent media! View the show notes on our website at https://congressionaldish.com/cd294-homeowners-insurance Background Sources Effects of Climate on Insurance “As Insurers Around the U.S. Bleed Cash From Climate Shocks, Homeowners Lose.” Christopher Flavelle and Mira Rojanasakul. May 13, 2024. The New York Times. “Van Hollen, Warren, Whitehouse Urge Treasury to Protect Consumers Against Insurance-Related Climate Risks.” Chris Van Hollen et al. September 7, 2023. Chris Van Hollen, U.S. Senator for Maryland. “Climate Change and U.S. Property Insurance: A Stormy Mix.” Alice C. Hill. August 17, 2023. Council on Foreign Relations. “Facts + Statistics: Homeowners and renters insurance.” Insurance Information Institute. “Climate change and P&C insurance: The threat and opportunity.” Antonio Grimaldi et al. November 19, 2020. McKinsey & Company. Lobbying “Chuck Grassley: Top Industries 1989 - 2024.” OpenSecrets. “Ron Johnson: Top Industries 2009 - 2024.” OpenSecrets. “Oil & Gas Recipients.” OpenSecrets. Heritage Foundation “Heritage Foundation.” SourceWatch. Demotech “Harvard Study Again Stirs the Pot on Demotech Ratings of Florida Carriers.” William Rabb. April 15, 2024. Insurance Journal. “When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets.” Parinitha Sastry et al. December 2023. Fannie Mae “Fannie Mae: Loans, Rules, and Programs.” Adam Hayes. May 17, 2023. Investopedia. Hurricanes “National Hurricane Center Tropical Cyclone Report: Hurricane Otis” [EP182023] National Oceanic and Atmospheric Administration. “National Hurricane Center Tropical Cyclone Report: Hurricane Michael” [AL142018] National Oceanic and Atmospheric Administration. Audio Sources Riskier Business: How Climate is Already Challenging Insurance Markets Senate Committee on the Budget June 5, 2024 Witnesses: Glen Mulready, Insurance Commissioner, State of Oklahoma Rade Musulin, Principal, Finity Consulting Dr. Ishita Sen, Assistant Professor of Finance, Harvard Business School Deborah Wood, Florida Resident Dr. EJ Antoni, Research Fellow, Heritage Foundation’s Grover Hermann Center for the Federal Budget Clips 23:05 Sen. Sheldon Whitehouse (D-RI): In 2022 and 2023, more than a dozen insurance companies left the Florida residential market, including national insurers like Farmers. Residents fled to Citizens Property Insurance, the state backed insurer of last resort, which ballooned from a 4% market share in 2019 to as much as 17% last year. If it has to pay out claims that exceed its reserves, citizens can levy a surcharge on Florida insurance policy holders across the state. Good luck with that. Particularly if the surcharge grows to hundreds or even thousands of dollars to depopulate its books. Citizens has let private insurers cherry pick out its least risk policies. Those private insurers may have problems of their own, as we will hear today. 25:10 Sen. Sheldon Whitehouse (D-RI): The federal budget takes a hit because these insurers and their policies are accepted by Freddie Mac and Fannie Mae, who either own or guarantee a large part of our $12 trillion mortgage market. This all sounds eerily reminiscent of the run-up to the mortgage meltdown of 2008, including a role of potentially captive or not fully responsible rating agencies. 25:45 Sen. Sheldon Whitehouse (D-RI): Florida is far from alone. A New York Times investigation found that the insurance industry lost money on homeowners coverage in 18 states last year, and the states may surprise you. The list includes Illinois, Michigan, Utah, Washington, and Iowa. Insurers in Iowa lost money each of the last four years. This is a signal that hurricanes and earthquakes, once the most prevalent perils, are being rivaled by hail, windstorms, and wildfires. 28:00 Sen. Sheldon Whitehouse (D-RI): This isn't all that complicated. Climate risk makes things uninsurable. No insurance makes things unmortgageable. No mortgages crashes the property markets. Crashed property markets trash the economy. It all begins with climate risk, and a major ...
