U.S. Insurance Leaders Critique Treasury Report on Homeowners Coverage Trends

The U.S. Treasury’s Federal Insurance Office (FIO) released its January 2025 report, Analyses of U.S. Homeowners Insurance Markets, 2018-2022: Climate-Related Risks and Other Factors. It is hailed as the most comprehensive dataset yet on homeowners insurance, analyzing over 246 million policies aggregated to the ZIP-code level and covering 80% of the U.S. market. The report aims to provide insight into premium trends, availability, and the impacts of climate risks. However, the insurance industry has sharply criticized it for its methodology and conclusions.

Report Highlights
The FIO’s analysis revealed a significant increase in homeowners insurance costs between 2018 and 2022. Premiums rose 8.7% faster than inflation, with consumers in high-risk ZIP codes facing higher costs and nonrenewal rates. These trends were tied to increasing risks from climate-related disasters, including hurricanes, wildfires, and severe storms. The report also examined non-renewals, finding that rates rose particularly in high-risk areas, making insurance less accessible for many homeowners. FIO acknowledged the limitations of its dataset, which does not include 2023 and 2024 data, residual market information, or flood coverage.

Industry Criticism
Insurance leaders, including Jimi Grande of NAMIC and David Sampson of APCIA, have called the FIO’s efforts ‘flawed.’ Critics contend that the report disproportionately focuses on climate change while downplaying critical factors like inflation, litigation costs, and population shifts into high-risk areas. The industry argues that the report’s reliance on NAIC data—which NAIC itself has called incomplete and potentially misleading—compromises its findings. In late 2024, NAIC severed its data-sharing agreement with FIO, further complicating the report’s credibility.

Proposed Solutions
Industry representatives advocate for systemic changes to stabilize the market. Suggestions include allowing insurers to price risk according to expected costs without government interference, as well as emphasizing resilience and mitigation programs to reduce climate-related losses. NAMIC and APCIA highlight their ongoing support for numerous mitigation efforts, asserting that these are critical to improving affordability and availability.

Challenges with Data Collection
The report highlights significant challenges in collecting and standardizing ZIP-code-level data, particularly given that this was the first such collaboration between NAIC and FIO. Data inconsistencies, unreported fields, and the exclusion of smaller insurers in certain states add layers of uncertainty. Moreover, state-level regulatory differences and moratoriums on non-renewals during the COVID-19 pandemic further complicated the data analysis.

Broader Implications
The FIO’s report aligns with broader federal priorities, including President Biden’s Executive Order 14030 on climate-related financial risk. However, its reception underscores the deep tensions between federal oversight and industry stakeholders. While it seeks to address affordability and availability concerns, the report’s perceived flaws risk undermining its practical utility and credibility within the insurance sector.