The American Property Casualty Insurance Association (APCIA) issued a statement addressing rising property insurance losses and associated affordability challenges, citing inflation, overbuilding in high-risk areas, legal system abuses, and regulatory constraints as primary factors.
The statement, attributed to David A. Sampson (pictured above), APCIA’s president and CEO, emphasized the need for systemic solutions rather than shifting risk to government programs.
“Property insurance losses have been escalating and it’s not just the weather,” Sampson said. He identified 40-year-high inflation, overbuilding in high-risk areas, and regulatory costs as significant influences on insurance affordability.
He said that APCIA was committed to promoting stronger building codes, environmental mitigation, and community resilience as practical approaches to improving affordability and sustainability.
Sampson cautioned against reliance on government insurance programs or regulatory rate suppression to address environmental risks, describing these as short-term measures that may perpetuate cycles of losses and rebuilding.
“Collecting and analyzing homeowners’ insurance nonrenewal data does not provide relevant information tying rising insurance losses to climate risk,” Sampson said. “There are many varying factors impacting insurers’ non-renewal decisions. Importantly, most insurer non-renewals are not a result of climate change and most insurer responses to the real impact of climate change do not involve non-renewals.”
APCIA also addressed myths surrounding insurers’ non-renewals, including claims that these decisions are solely driven by climate change. According to the organization, non-renewals result from various factors, such as material changes to properties, litigation environments, capital reallocation, and regulatory constraints.
For example, some insurers may issue non-renewals to transfer coverage to an affiliate or because regulatory rate suppression fails to ensure long-term solvency.
Sampson noted that while weather-related claims play a role in market dynamics, most insurers have not relied on non-renewals as their primary response. Instead, insurers have employed other strategies, such as tightening underwriting standards, reducing advertising, and pausing new business, to manage risks and losses.
The APCIA statement also refuted claims linking market challenges in high-risk regions solely to climate change. It argued that differences among states point to government risk and regulatory interference as primary drivers of instability.
APCIA highlighted Florida, California, and Louisiana as examples where factors beyond weather, including regulatory policies, have contributed to market challenges.
In 2023, APCIA submitted its report, “Factors Influencing the High Cost of Insurance for Consumers,” to the House Financial Services Committee, examining these broader issues.
The organization’s recent statement was also submitted to the Senate Committee on the Budget on Dec. 18 as part of its ongoing efforts to address market instability and provide solutions for consumers.
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