News Release: More Rigorous Data Needed To Understand the Impact of Insurers’ Climate Decisions on Consumers


Nov. 3, 2023

William Pierre-Louis, Jr.

More Rigorous Data Needed To Understand the Impact of Insurers’ Climate Decisions on Consumers

Federal Insurance Office data request to homeowners insurers requires important information but is too narrow and misses key questions

Washington, D.C. — Treasury’s Federal Insurance Office (FIO) took an important initial step this week toward understanding how climate change is affecting homeowners insurers’ coverage and pricing decisions for consumers. Disappointingly, however, the notice of data collection was scaled back from earlier proposals, omitting queries critical to fully understanding the nature of the ongoing insurance crisis.

“From sky-high rate increases to insurers pulling out of areas or going out of business altogether, it is clear that climate change is impacting the availability and affordability of homeowners insurance nationwide,” said Caroline Nagy, senior policy counsel for housing, corporate power, and climate justice at Americans for Financial Reform Education Fund. “The FIO data call is a move in the right direction, but this scaled-back version wrongly limits the information insurers will be required to provide. We need more data, not less, to fully capture the harm to consumers from steep price increases or withdrawals of coverage; disparate impacts on BIPOC and underserved communities; and the potential for systemic risk that may spill over into the broader financial system.”

FIO’s notice requires some of the largest homeowners insurers in the U.S. to disclose their overall exposure, premiums, and claims, to capture a nationwide view of how climate is disrupting homeowners insurance — a key element to understanding how climate-related financial risks impact families and individuals across the U.S. and could reverberate through the the broader financial system. However, by limiting the granularity of the data and the number of insurers required to respond, the notice lacks the depth needed to analyze climate-related impacts on the most climate vulnerable: communities of color and low income communities.

FIO faced stiff opposition from the insurance industry and rebuffs from the National Association of Insurance Commissioners, after appropriately determining that state insurance regulators could not provide, in a timely manner, the type of nationwide data that FIO has a duty to collect to identify issues or gaps contributing to a systemic crisis in the insurance sector.

The data call requires certain homeowners insurance providers to disclose details about their climate-related exposures and how these affect insurance availability for policyholders. It will cover the past six years of underwriting data. This data will be collected granularly, by zip code, rather than at the state or nationwide level where information is currently available. However, FIO scaled back the data call from its earlier proposal, reducing the number of insurers impacted and cutting back the requested data points by half, including omitting claims denials.

Rather than seek an insufficient middle path, FIO must broaden the data call to include census tract-level data, claims delays and underpayments, and disaggregated non-renewals data. We support FIO’s moving forward with this data collection and making the data public, because the ability for states and local governments and other stakeholders to make tailored policies to protect communities from the physical and financial impacts of climate change depends on such publicly available, granular data.

AFREF and partners submitted comments last year with recommendations in response to FIO’s initial proposed data call.