Banking Committee Examines Impact of Rising Property Insurance Rates
The Senate Committee on Banking, Housing, and Urban Affairs recently held a hearing to consider how recent developments in the property insurance market are impacting consumers, with particular emphasis on housing costs.
The context: In his opening statement, Committee Chair Sherrod Brown (D-OH) noted increased frequency of severe weather events and rising costs associated with reconstruction after those events have prompted many property insurers to increase premiums substantially, restrict coverage options, and in some cases, stop operating entirely in certain states.
Ranking Member Tim Scott (R-SC) contended the biggest driver of recent insurance premium increases are unnecessary regulations and legal systems that subject insurance companies to frivolous lawsuits. Scott said the best solution was for state governments reverse mandates and foster more market competition.
One level deeper: One of the witnesses in the hearing was Michelle Norris, executive vice president of National Church Residences, who testified about how rising insurance rates are hurting the affordable housing provider.
According to her testimony, over the past six years, premiums for National Church properties, which house some 20,000 low-income seniors across 23 states, have risen from $2.5 million to more than $13 million, an increase of over 400 percent, far outpacing the growth of the nonprofit’s portfolio. “Ultimately, affordable housing providers may be forced to consider whether to opt out from participation in the affordable housing market if insurance and other operating costs continue to outpace allowable rent,” said Norris.