A trio of New York lawmakers have launched an investigation into why homeowners insurance costs have spiked across the state in recent years.
State Sens. James Skoufis, Jamaal Bailey and Brian Kavanagh said in a joint statement that they want "to identify the causes of increases in premiums and any other obstacles to insuring new and existing single- and multi-family homes."
Their probe begins at a time when homeowners nationwide have also seen their policy rates rise.
In the statement issued Monday, Bailey said the lawmakers are looking into insurance in part because residents have continuously contacted them about the state's ongoing housing affordability crisis.
"One specific area of concern is the increase in insurance premiums and the effects they potentially are having on the housing market," said Bailey, of the Bronx. "Our responsibility is to get to the bottom of what’s driving changes and to ensure that policyholders are treated fairly, and that companies can adequately insure those who request coverage."
The Insurance Information Institute, a Pennsylvania-based trade group that represents insurance companies and is known as Triple I, has long said an uptick in weather disasters related to climate change and the rising cost of building materials are the main culprits for premium increases.
"Much like Americans are experiencing higher prices for virtually all material goods, a key driver for homeowners' insurance has been around the likes of construction materials, which are an important element used when insurers help customers rebuild after catastrophe strikes," said Sean Kevelighan, the institute's CEO, in a 2024 report on why homeowners rates have increased. "According to Triple-I’s own economic analysis, cumulative replacement costs related to homeowners' insurance soared 55% between 2020 and 2022."
Kevelighan and the insurance institute also noted that Americans continue to move to disaster-prone regions across the country, where covering someone after a catastrophe becomes riskier and therefore more expensive.
Casualty and property insurance companies are regulated in New York by the Department of Financial Services. Like other markets, insurers looking to increase rates must first get approval from state regulators.
The senators said their investigation began last week when they sent letters to the financial services department requesting information, along with requests to 32 trade groups, associations and insurance companies operating in the state. The lawmakers did not disclose which companies specifically they contacted.
The probe, which the trio said will last through the fall, will also include public hearings seeking input from affordable housing operators, developers, homeowners and experts who understand the impact climate change has on extreme weather events.
"The investigation will culminate with a report of our findings and recommendations of solutions that protect policyholders across the state," Skoufis of Orange County, New York, said in a statement.
Homeowners face 'unacceptable risks'
Homeowners insurance premiums have increased 13% between 2021 and 2024 in New York, according to the Consumer Federation of America. Premiums have climbed close to 50% in Utah, Illinois and Arizona during that period, and they've fallen in Mississippi and West Virginia, the group said in an April study.
All told, homeowners paid roughly $3,303 a year for coverage in 2024, up from $2,656 in 2021, the organization said, adding that the rising cost of building materials and shrinking number of reinsurance providers have contributed to cost increases.
The rising cost will keep first-time homebuyers out of the market and will force current homeowners to either sell their house or default on their mortgage, the Consumer Federation of America said.
"If insurance costs continue to rise to unsustainable levels, this will undermine our efforts to ensure that all New Yorkers have access to housing they can afford; prevent builders, property owners, and homebuyers from obtaining financing, and require homeowners to face unacceptable risks of losing their most valuable asset," Kavanagh said in a statement.
Roughly 5% of New York homeowners — roughly a half-million residents — are uninsured, the lawmakers said in a statement.
"While the property and casualty industry consistently lose money in other states across the country, they post enormous profits year after year in New York," Skoufis said. "One of two things is happening. We are subsidizing losses in other states, or we are padding the pockets of the insurance industry. Either is unacceptable and requires a robust, comprehensive legislative response."
In a statement, Kevelighan said insurance companies protect customers against financial losses during unforeseen events, and insurers play "a vital role in the economy."
"However, if insurance companies were to become unprofitable and unable to meet their financial obligations, it leaves policyholders without coverage when they need it most," he said.
