U.S. House to Look at Wildfire Insurance Coverage & Federal Insurance Regulators

Apparently, and not knowing, or understanding, much about the history of how insurance coverage is regulated, the House Financial Services Committee — passed by a 47-2 vote — has pushed a bill to the floor of the U.S. House to study wildfire risk and insurance.

If passed by the House, the bill will require the Government Accountability Office (GAO) to analyze a number of issues around homeowners insurance:

  • Assess wildfire risk
  • Analyze the impact of wildfires on homeowner and commercial property policies
  • Look at premium increases
  • Analyze the impact of coverage cutbacks
  • Look into the response of insurance regulators to those issues
  • Outline and analyze the challenges related to underwriting wildfire risk

The bill — the Wildfire Insurance Coverage Study Act — is written and sponsored by California Democrat, Rep. Maxine Waters. She told the committee her state has been decimated by wildfires and that, in some communities, insurers have hiked coverage to unaffordable levels, or stopped covering homes altogether.

In her remarks, Waters did toss a bone to insurance regulators and acknowledged that insurance is regulated at the state level. However, she pointed out the National Flood Insurance Program (NFIP) is an example of where the federal government stepped in and offered insurance where regulators, and the private market, failed.

“In the case of wildfire insurance coverage, we’re at a critical juncture where we need to better understand insurer challenges as well as how to prepare and protect families and homes in our economy against this growing risk,” Waters told the committee.

During the debate climate change was brought up several times as being a primary cause. Republican committee chairman, Rep. Patrick McHenry of North Carolina said this bill is about the devastating impact of wildfires on people and communities and the discussion needs to be above the political clashes between the parties over climate change.

Wildfires — he noted — burned 10 million acres and caused $16 billion in damages in 2020 alone.

“Climate change and the changing nature of our weather patterns is evident to those that underwrite insurance,” McHenry said. “It is not about the political debate on climate change. It is about what the insurers are seeing in real losses [and] homeowners are experiencing in rising insurance rates. The data indicates that we have more expensive weather patterns that are [costing] real people, real dollars.”

When the bill will get a vote is unknown at this time.

What was dropped from committee discussion because of the need to vote on funding to keep the federal government afloat, was a bill, the Insurance Data Protection Act, that would prevent the Federal Insurance Office (FIO) and the Office of Financial Research from using subpoenas to get information from insurers.

The bill will require the FIO to coordinate any data collecting from insurers with state regulators before that data can be collected.

Source link: Insurance Business America — https://bit.ly/3v1xSFl

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