NAMIC Calls on Congress to Help Strengthen Homes, Address Legal System Abuse

A healthy homeowners insurance market depends on making homes better able to withstand severe weather risk and a business environment without overwhelming regulatory burdens or excessive litigation that threaten the ability to protect policyholders, the National Association of Mutual Insurance Companies told members of Congress today.

In testimony submitted to the Senate Banking Committee for a hearing examining insurance markets and the role of mitigation policies, NAMIC outlined the numerous challenges facing insurers in the marketplace, from population shifts into high-risk areas to heavy-handed regulation and a marked increase in litigation funded by for-profit investors.

“The confluence of extreme weather, lawsuit abuse, regulatory actions, and stubborn inflation have left insurers paying out more than they are taking in from premium,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “As a business model, operating at such losses is not sustainable.”

However, Grande noted that neither NAMIC nor its more than 1,300 NAMIC member companies accept the idea that Americans are facing unsurmountable risks from the changing climate and extreme weather. “The future is not uninsurable,” Grande said. “Insurers, along with federal and state policymakers and regulators, must have the courage to take necessary steps to strengthen the built environment, tackle external cost drivers, and foster regulatory environments that encourage accuracy and promote competition.”

Mitigation has been shown to provide exponential savings in reduced losses for every dollar invested. NAMIC’s testimony urged the Senate to take up the House-passed Fix Our Forests Act to modernize forest management and increase mitigation in the Wildland-Urban Interface.

However, mitigation alone will not solve the problem. NAMIC’s testimony urged lawmakers to adopt policies to recognize the challenges of increasing costs for building materials and labor, especially after a large-scale disaster, that have driven increasing insurance costs, and to bring much-needed transparency and controls to the third-party litigation funding industry.

“Consumers, policymakers, and insurers share the common goal of a healthy, competitive homeowners insurance market,” Grande said. “Despite significant pressures, mutual insurers continue to protect their policyholders from the unexpected. But insurance rates are a function of insurance costs. If doing business in a market becomes unsustainable, everyone loses.”