U.S. Shifts Strategy on Home Insurance Data Collection Amid Rising Premiums and Climate Risks

The U.S. Treasury Department is adjusting its approach to gathering critical data on home insurance, moving away from direct collection at the ZIP code level to collaborating with state insurance regulators. This decision comes amidst rising home insurance premiums and escalating property risks due to climate change. Originally, the Federal Insurance Office (FIO) planned to collect detailed information on premiums, policy non-renewals, and cancellations to identify areas at risk of significant insurance disruptions from climate change. However, this initiative faced opposition from the insurance industry and Republican lawmakers, prompting a shift towards working with state regulators and the National Association of Insurance Commissioners (NAIC).

The NAIC, leveraging its authority over the private insurance market, will now spearhead the data collection, promising coverage of over 80% of the U.S. property insurance market by premium volume. This method is anticipated to yield more comprehensive data, with initial findings expected in the spring. While the public availability of this data remains under consideration, the collaboration has been met with cautious optimism by industry stakeholders, despite consumer advocacy groups warning of potential gaps in risk assessment.

As climate change intensifies the frequency and severity of natural disasters, the home insurance market in the U.S. faces upheaval, with insurers retreating from high-risk states like California and Florida. This retreat has shifted a significant burden onto state-run "insurers of last resort," now facing over $1 trillion in exposure. The rising costs and reduced availability of private insurance underscore the urgency of comprehensive data collection efforts to address the evolving challenges in the insurance landscape.