U.S.: States Investigate Challenges in Home Insurance Purchase

State regulators across the country ordered hundreds of insurance companies on Friday to disclose details about how they price and structure their homeowner policies, as part of an investigation into why many property owners are unable to obtain and maintain coverage.

The National Association of Insurance Commissioners, which represents the regulators, stated that state authorities contacted over 400 companies, requesting extensive information on their homeowners’ insurance businesses. Companies’ responses are due by early June, and they must comply or face fines.

The association’s president, Connecticut’s insurance commissioner, Andrew N. Mais, stated on the group’s website that the request was made to “address the critical challenge of the affordability and availability of homeowners’ insurance and the financial health of insurance companies.”

Inflation and increasingly severe weather caused by climate change have recently disrupted many local home insurance markets. Major insurers have pulled out of places like Florida and California. Homeowners in areas affected by natural disasters, such as windstorms and wildfires, have reduced their insurance coverage due to growing costs.

“The most pressing need at this time is to help communities adapt to climate-related risks and ensure they are adequately insured against unpreventable events,” said Mark Friedlander, a spokesperson for the Insurance Information Institute, an industry trade group.

Some of the data will be shared with the Treasury Department’s Federal Insurance Office, which is investigating climate change’s impact on the insurance business. Mr. Friedlander said it may assist the federal government in developing regulations to safeguard property owners in high-risk parts of the country.

The request represents state insurance regulators’ broadest response yet to significant developments in home insurance markets. Each firm has been asked to provide precise information on the types of coverage it provides in various ZIP codes, as well as the most recent history of claim payouts in those areas. Insurers will be required to publish information on the level of their customers’ deductibles as well as the potential for discounts that customers might receive by fixing or upgrading areas of their houses.

According to Friday’s release, regulators aim to be able to utilize the data to construct a clear and thorough picture of around 80% of all homeowners’ policies as determined by total insurance premiums.

The Consumer Federation of America, the Center for Economic Justice, and Public Citizen, three groups dedicated to assisting customers in obtaining inexpensive insurance coverage, said in a joint statement on Friday that the move was long overdue.

“Unlike regulators for other financial services, state insurance regulators have refused for decades” to collect the granular information on auto and house insurance that is required to analyze the market for consumers, the statement added.

Consumer organizations also stated that because the regulators only requested data on insurers’ plans for individual homeowners, they risked missing out on important information from policies issued to condo and co-op associations, as well as affordable housing developers.

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