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1 1 (June 12, 2024)

handle is hein.crs/govepgf0001 and id is 1 raw text is: Congressional ____ ~ ~Research Service Natural Disasters and the Homeowners Insurance Market June 12, 2024 Insurance consumers in parts of the United States have been experiencing higher prices and gaps in coverage, with households often struggling to find and afford homeowners insurance that sufficiently protects against hazards such as wind and wildfire. This may leave some households unable to find insurance outside of state-created insurers of last resort offering coverage that may be more expensive or less complete than private coverage. Recent media reports include accounts of insurers increasing premiums or withdrawing from homeowners insurance markets in many states. Without such insurance, lenders are unlikely to issue mortgages, leaving many people unable to purchase homes. Current homeowners may be left facing greater financial risk without insurance and may find difficulties in selling their homes. Higher insurance rates may serve as an important signal regarding future risk but may shift the risk of losses to individuals, the government, or other financial institutions. Although most policies addressing insurance markets are enacted at the state level, the scale of recent withdrawals from the market has increased congressional interest in federal intervention. Why Are Insurers Withdrawing from Some Insurance Markets? Rising prices and reduced availability of homeowners insurance involves the interplay between two large- scale factors: (1) increasing losses from natural disasters and (2) the recent macroeconomic environment marked by rising inflation and interest rates. Insured losses from natural disasters have increased over past decades, with nearly every major peril recording an individual insured loss event over $10 billion. Although large events such as major hurricanes cause outsized losses, secondary perils-lower cost but higher frequency events, such as thunderstorms-caused higher combined losses in 2022 and 2023-the fourth consecutive year where global insured losses topped $100 billion. Losses reached this threshold, although no single event caused more than $10 billion in insured losses. The prediction of an above-average Atlantic hurricane season in 2024 is leading to concerns about additional increases in homeowners insurance premiums. Increasing losses from natural disasters can be attributed to a combination of factors: rapid expansion of population Congressional Research Service https://crsreports.congress.gov IN12375 CRS INSIGHT Prepared for Members and Committees of Congress

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