Janet Yellen Secretary of the Treasury | Twitter Website
The U.S. Department of the Treasury's Federal Insurance Office (FIO) has released a comprehensive report on homeowners insurance, highlighting rising costs and declining availability due to climate-related events. The data covers over 330 insurers and more than 246 million policies from 2018 to 2022, collected in collaboration with the National Association of Insurance Commissioners and state regulators.
Key findings indicate that insurance premiums increased 8.7% faster than inflation during this period, with significant regional variations. Homeowners in high-risk areas for climate-related events paid an average of $2,321 in premiums, which is 82% more than those in low-risk areas. Additionally, policy nonrenewal rates were higher in regions facing greater climate risks.
Secretary of the Treasury Janet L. Yellen commented on the report amidst ongoing wildfires in Los Angeles, stating: "Treasury’s analysis comes at a time of devastating tragedy, loss of life, and destruction from the wildfires in the Los Angeles area." She emphasized the broader impact of natural disasters on insurance availability and affordability across the country.
Under Secretary for Domestic Finance Nellie Liang noted the importance of data collection efforts: “Data and analysis, like those in this report, are critical for helping policymakers understand how substantial climate-related property losses are being spread across homeowners, insurers, and governments.”
The FIO's report aligns with President Biden's Executive Order 14030 from May 2021, directing an assessment of potential disruptions to private insurance coverage due to climate change impacts. The ongoing partnership between FIO and NAIC aims to address these challenges by providing detailed market insights.
To enhance transparency while maintaining privacy protections, Treasury is releasing aggregated ZIP Code level data used in their analysis for public access where applicable.
