Davidson Delivers Remarks at Hearing to Examine the Factors Influencing the High Cost of Insurance for Consumers
Washington,
November 2, 2023 -
Today, the House Financial Services Subcommittee on Housing and Insurance, led by Chairman Warren Davidson (OH-08), is holding a hearing entitled “The Factors Influencing the High Cost of Insurance for Consumers.”
Watch Chairman Davidson’s opening remarks here.
Read Chairman Davidson’s opening remarks as prepared for delivery:
“Today the Subcommittee will hold a hearing to discuss factors influencing the high cost of insurance facing consumers across the country.
“It is unfortunately a topic that both families and businesses are grappling with on top of the already steep cost of inflation and interest rate increases.
“We welcome today the testimony of our distinguished panel of witnesses, each of whom can address the cost and availability of insurance from several different perspectives.
“Specifically, I’d like to welcome Mr. Joseph Petrelli, who runs Demotech Incorporated, which is an independent insurance rating agency out of Dublin, Ohio. Given his decades of experience in the insurance industry, Joe has a unique perspective on challenges facing the insurance markets at this time.
“I look forward to hearing the insights of Joe and all of our witnesses.
“This hearing comes at a critical time, as consumers are facing record-high property and casualty insurance bills.
“Homeowners’ insurance costs are surging in many areas, with Americans paying between $1,500 and $2,500 per year. But many communities outside of this range have seen premiums increase by multiples of what they paid last year.
“In addition, this year the price of commercial property premiums experienced the largest single-year increase in over 20 years.
“Such costs are untenable for many, forcing homeowners to move to areas with less expensive coverage and pushing up the prices of rent in commercial properties–at a time when housing costs are at record highs.
“Meanwhile, losses for insurers are going up. Companies are paying out 104 percent in claims for every premium dollar they have taken in thus far in 2023.
“Add to that the growing market risks stemming from widespread lawsuit abuse from trial attorneys who are now spending hundreds of thousands of dollars each month on paid keyword search results.
“Those results are designed to target recent disaster victims and other insurance claimants and trick them into filing frivolous lawsuits.
“More and more, it seems that the insurance industry is at a tipping point where the risks of providing insurance are making the cost of insurance unsustainable even in the best regulatory environments.
“Which is why it is so problematic when you have officials who ought to know better making bad and politically motivated decisions that add costs and decrease insurance availability.
“We have seen that often in the California market, the subject of two Committee hearings in the last year, where the imposition of ESG-like mandates have prevented insurers from charging actuarially sound rates or using modern modeling tools to mange wildfire risk.
“And we have also seen it with the Federal Insurance Office (FIO), a federal non-regulatory entity that is supposed to monitor the industry to help actual regulators make better choices.
“Instead, we have seen the Biden Administration abuse FIO to turn it into a politically-charged advocate for the Biden Administration’s social agenda.
“FIO is attempting to bypass state insurance commissioners and add massive new costs onto policyholder’s bills through an unprecedented mandatory climate data call. In fact, this week, FIO has made clear that they are moving forward with this misguided effort despite widespread blowback.
“As I said in a March letter to FIO, that’s not just wrong, it also raises real questions about FIO’s continuing mission creep, leading to multiple bills being introduced to rein in this spiraling office.
“All of which brings us to the fundamental point here: insurance is, has been, and should remain a state-regulated product, free from the involvement and clutches of meddling federal bureaucrats.
“Support for the longstanding principles of the McCarran-Ferguson Act is something that every Member of this Committee should stand by and affirm as the best way to protect policyholders and create healthy, functioning markets.
“I hope everyone here will show support for that ideal today, and I yield back the balance of my time.”
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