A look now at challenges in the property Insurance Market witnesses discuss the impact of rising Interest Rates, oversight of Insurance Marketplaces and insurance providers leading california, texas and other state this hearing held by the senate, taking housing and urban housing committee. Committee banking, housing and urban affairs, to order. Witnesses who have been before and welcome, colleagues and staff first hearing, obviously, post labor day. A few Financial Decisions are more important than buying a home but homebuyers are making the best for themselves, their families and communities. Homebuying is an act of optimism and also stressful families buying a new home have so much to think about a sure they cover that down payment, navigating mortgage and closing process, moving in, getting kids set up in new schools if they have children. Buying Homeowners Insurance has been a part of the process that gets families certainty and peace of mind for homeowners are confident their monthly Insurance Premiums will provide a backstop against the physical and financial devastation that could ensue if their largest investment is threatened by increasing number of Natural Disasters, tornado, hurricane or wildfire and other dangers, incidents or accidents. Knowing they are covered can help homeowners sleep better at night. Or that is how it is supposed to work but increasingly, homeowners, have faced an unpleasant surprise when it is time to renew policies. Homeowners who spent years making their payments regularly without fail are shocked to find their insurers has raised the cost, limiting coverage or too many cases wont renew the policy at all. Insurers have abandoned and in some places entire market leaving consumers with fewer options that cost more and provide less coverage. Consumers are counting on their insurers now more than ever. According to noaa, the countrys experience 15 weather disasters, each resulting in losses of more than 1 million. 50 disasters causing more than 1 billion. Severe storms resulted in 34 billion of insured losses for the first half of this year alone, the highest ever in a six month period. No reason to think those numbers will keep going up with Climate Change. Hawaii, florida, borough lot, extreme weather events up and and millions of americans lives. Last month the Deadly Wildfires in our 50th state tragically killed at least 115 people with hundreds more missing, projected losses of 6 million per losses from hurricane a dahlia, which plowed through florida, georgia and the carolinas last week can reach 20 billion. Senators welch and sanderson, the raking manner and center scott amis ahead of the hearing. They have details from status measurement devastating floods. Homeowners, landlords and renters can hit them the hardest but is the lowest income residents. We know that in disaster after disaster. It is most residence in committees of color have been pushed into the areas that are most Affordable International disasters as weather patterns change because of Climate Change, risk and exposure and places that have not been prone to natural catastrophes. This is let Insurance Company to reify a risk concentration levels and not just on the coast. As the head of the association for insurers said, there is no place to hide from the severe Natural Disasters. The result has been a disturbing and abrupt trend. Companies are researching coverage or raising rates in some cases they leave states or geographic areas out entirely. As secretary yellen recently noted, the result is a protection gap, increasing costs with limiting options for families and increasing Financial Stability concerns are cross the Financial System for u. S. Insurance rates, the cost of insurance that Companies Buy in to protect themselves by spreading out risk have reportedly increased up to 50 . These jumps in reInsurance Premiums have been driven, in part, by frequent and more severe Natural Disaster for themselves and investors higher reinsurance rates mean higher costs for Insurance Companies, which mean price hikes passed on to consumers every month it has left millions of americans pay more for insurance often with less protection than before while others to scramble to find any insurance at all because their insurance has refused to renew the policy. California, two major insurers, state farm and also date stop writing new policies in the whole state. They cited the growing risk of disaster feet and insurance rates as factors but not to be outdone. In florida, since 2020, 16 severe storms and hurricanes have caused more than 100 billion worth of damage and led to an exodus of insurers. Farmers insurance became the fourth in florida alone to exit the market. Joining bankers insurance, lexington insurance. They would stop writing property policies in that state. Many are looking for new coverage. Days a days later aaa announced it would not have higher exposure policies in the state per despite that average premium cost 6000. The highest in the country. 14 insurance comings have left the state or have the receivership process. Insurers exiting state markets and left homeowners and businesses with no choice but to seek coverage from state mandated insurers of last resort, which provide bare bones policies and typically higher rates. Insurers of last resort are exactly that, they are the last resort. That used to mean these had a small share policies. As exposure is increasing as especially coastal states but everywhere have been battered. In florida, for the citizens, the state insurer of last resort is now the states single large property insurer, 1. 4 million policies. California is the california fair plan has been 100 increase in policies over the last five years. Reportedly offering coverage to 300,000 policies at the end of last year. It is not only homeowners hit by rising cost. The National MultifamilyHousing Council reports similar issues for multifamily sector, higher rates and deductibles, coverage limitations and in some cases mobile private market Insurance Coverage option at all. Because each policy is a contract between the Property Owner and the insurance, it is hard to know when they have stopped writing coverage. In apartment owners tell us they are seeing a clear trend. They will only bear the burden as higher cost is passed on to them in the form of even higher rents. Owners have already too small supply of Affordable Apartment serving the lowest income renters may be increasingly left with impossible choices. Todays witnesses understand the unique challenges facing homeowners and Property Managers from columbus, the capital of my home state of ohio is seeing a problem of rising insurance costs firsthand across the many state or Church Residents provided. I am pleased to have all three of you here today. As we explore these important topics. Ricky member, got. Thank you for joining us today. It is such an important conversation about the state of insurance and the Important Role that insurance plays in the ability for homeowners, specifically as we discussed today. Transfer the rest to an Insurance Company. Coming from south carolina, thinking about my friends in florida and georgia and North Carolina, thinking about the devastation of the fires in maui , my prayers and my thoughts are certainly with those folks who lost family members and have seen their lives devastated, their properties destroyed. So much attention is given to the challenges of the environment, climate. All too often what we see with maui or in other states is that man made disasters that jeopardizes states. I think about the fact that in my lifetime, as an adult i spent 20 plus years in the insurance business. I do have an affinity for terms that we use when i was in business. Mike, have you ever been in insurance . Two boy, have i. One of the things that we have both talked about is the probable maximum loss. Can an Insurance Company calculate accurately or even in the range of reality what is a probable loss within the markets. Whether that market is in the charleston area where we are prone to hurricanes or the state of california or ohio with storms and or other national Natural Disasters. Can the company predict the loss that will be incurred. It can be absorbed based on the premiums they charge per policy. When you cannot, you do not stay in the market. It is kind of that simple. Insurance companies have to follow the basic rules of economics like any other business. That is why the challenges that we see, particularly in states like california and florida california is overregulated and it makes it very difficult for Insurance Company to make a profit in the state we cannot make a profit, you dont day in the state. One of the reasons why you see state farm aig, and other Insurance Companies that were named leaving market. Race efficiency is impossible to get there. And then the inability to find the path forward. Whether it provides some reduction of the risk or, as i have discussed before, absolute necessity of us to get our arms around the catastrophic currents from coast to coast. Weather is a hurricane, earthquake, flood or tornadoes. We have not wrestled with the actual damages done by catastrophic occurrences across the country. If youre on the coast or frankly in the south, louisiana, florida, or south carolina, we account for half of all the premiums going into the nfip. When a flood happens in new york , new jersey or ohio, the policyholders there have never heard of or thought of a Flood Insurance policy. They are drawing money out of an account without having put any resources in. We have some challenges that we should identify and understand and i appreciate that every Insurance Company is wrestling with today. We think that states like california and florida, two things come to mind. In one state you have a burdensome marketplace that is impressive. It drives business apps. There Insurance Companies that are fleeing the state of california. Every other business i can find another place to go deems to be looking for a different market. Florida, part of the challenge that we see is the Regulatory Environment is challenging. Certainly, the master disasters 9 of the homeowner policies in the country, represent about 79 of Homeowner Insurance lawsuit. Over the last decade, companies in florida have paid out 51 billion, however, 71 of that goes to attorney fees. Something is broken in the market. It is not the homeowner that is receiving the lion share of the resources. It is the lawyers because of the challenges in a broken state as it relates to the environment that is apparent, obvious and clear in florida. Whether it is california or florida, we need to understand, holistically, the challenges that these Insurance Companies face. I would love to hear from the experts today solutions, opportunities to recalibrate markets. For us to have a panoramic view of how to keep Insurance Companies viable in these markets. Without any question, homeowners, today are desperately looking for opportunities to afford the coverage they think the average premium for a house, 1700 for homeowners for the same policy in florida it is 6000. If that is the case, it is not simply a case of race officially based on the probable maximum loss of the Natural Disaster. It has to do with the 51 billion paid to attorneys that have to be factored into the new definition of race efficiency that will be really hard to meet if that environment does not change. We met tana, senator scott. I will introduce todays witnesses. Doug heller is a member of the treasury department. The executive committee of California Coalition of against insurance fraud, heller, welcome. Executive Vice President external affairs and Strategic Partnerships at national Church Residents, the largest provided of senior housing. She serves as chair of the board of directors for the stewards of formal housing for the future, a member of the board of directors for the corporation. Supportive housing and a pass for more of the sustainable, affordable and Housing Management association. Noris, welcome. Jerry three at no he served as director of Search Research in multiple roles in the ig welcome. Mr. Heller, please begin. Good morning, mr. Chairman and centers. I am doug heller. There is several forces creating the property insurance and crisis in many parts of the country. I will highlight what consumers are dealing with, the underlying driving of crisis and thoughtout government, insurers and Property Owners can Work Together to reduce the cost, improve coverage and build safer homes and more resilient communities. In 2022 americans spent about 125 billion for Home Insurance. It is about 40 faster than inflation since 2017. We hear from many around the country paying upwards of 500 per month just for the basic Home Insurance. Add more if they need to and if they need to buy a separate file, earthquake or windstorm policy. Regions exposed to the worst climate risk are being hit hard in this market. This is a national problem. In fact, some of the highest price are paid by resnick of the midwest who are facing tornado and hail risk. The neighborhoods most vulnerable to climate disasters are often home to communities of color and low income americans amplifying the crisis for them. It is not just geography targeting these communities. In all but a few states, insurers penalize homeowners if they dont have a great credit score. Even if they had never filed a claim for this disproportionate harms lower income folks, people of color and rural american adding more pressure on the premiums that are boiling over due to Climate Change. The second part of the crisis is the Insurance Companies deciding to walk away from lungs or communities and some states entirely. Since every one of the mortgage is required to maintain coverage and because people want protection for their most vital asset, this is a scary situation. What makes people so angry is that the insurers for years, who are the presumed experts, they have told them that their neighborhood is fine and insurable. They always collected the premium. For companies to take the chips off the table without warning and walk away is unacceptable. Especially after the injury resisted calls for climate risk analysis for years. As a result, we are seeing many more people forced into the state insurance providers as a last resort, would sell a high price policy with barebones coverage. Or when people cannot make payments they being forced placed into expensive coverage by their Mortgage Company and this we are hearing more and more, people simply cannot afford to own a home because they cannot get insurance. The third problem is the hollowing of the coverage that people cant afford. Rather than working in partnership with their policyholders and committees to reduce the risk of loss due to climate disasters, Insurance Companies are selling policies with less rebuilding benefit, more exclusions and higher deductibles companies are reducing their own risk, sure. That does not change the actual cost of disaster risk. It transit back to homeowners, renters, farmers and other consumers. Why is this happening . There are two drivers of the crisis. First, the reality of worsening disasters is undeniable. Tackling this requires a collaborative effort to reduce the risk that stems from Climate Change by investing in safer homes, buildings and more well defended and resilient communities. This involves better data collection, expanded public support of Infrastructure Investment and more grants for individual homeowners and building owners to harden their homes. When Properties Owners invest in loss mitigation, they should be promise access to coverage and relief on premiums. Also, this discussion must include issues a property developer, Affordable Housing and equity as we try to adapt to climate risk if we dont take on the larger question, then Insurance Companies will be the one left in charge of venues and housing policy through their underwriting decisions. The second key driver of this Current Crisis is the exploding prices in the unregulated global reInsurance Market. It is what the property Insurance