Climate change, economic inflation, abuse of the legal system, global cost of capital, and the impact of regulatory restrictions on risk management are among the challenges faced by the insurance market, according to the American Property Casualty Insurance Association (APCIA).
APCIA has called for solutions to address the pressures brought forth by skyrocketing insurance costs following natural disasters that hit the country, leaving millions of people at risk.
The APCIA statement is in support of a US Senate Committee on Banking, Housing, and Urban Affairs hearing entitled “Perspectives on Challenges in the Property Insurance Market and the Impact on Consumers.”
The hearing held last week explored potential solutions to the growing insurance crisis fueled by extreme weather events and the exodus of insurers from high-risk states such as Florida and California.
Committee members received testimonies from insurance industry experts and consumer advocacy groups.
“Property casualty insurers have been long-time leaders in addressing the impacts of climate change by advocating for stronger mitigation, resilience efforts, and building codes," said Nat Wienecke, senior vice president of federal government relations at APCIA.
"With natural disaster losses rising and millions of people increasingly at risk, the cost of insurance is going up in many areas of the country, and some insurers are having to rebalance their risk and reduce their exposure as a result of continuing natural disaster losses. Reducing our risk must continue to be a shared priority among us all, and we must work together to adapt and increase our resilience in the face of climate-fueled disasters.”
The average annual weather-related catastrophe losses increased in 2022 to $126 billion, according to the Global Federation of Insurance Associations. In the last three years, losses in the US exceeded $100 billion each year—the costliest three-year period on record.
“Insurance is the economic safety net that rebuilds homes, neighborhoods, and communities. It is vital that this safety net remains available and functioning,” said Wienecke.
“Any strain on insurance affordability and availability is a serious concern—and that is why we are advocating for solutions to address increasing insurance costs facing families, individuals, and business owners.”
