During a Senate committee hearing focusing on insurance and loss mitigation efforts, industry representatives said the all levels of government play a role.
“Where government regulation and infrastructure allow private, competitive, insurance, and global reinsurance markets to flourish, consumers are well-served and protected,” said Robert Gordon, senior vice president of policy, research, and international at the American Property Casualty Insurance Association (APCIA) during testimony May 1 before the Senate Committee on Banking, Housing, and Urban Affairs.
The hearing, “Examining Insurance Markets and the Role of Mitigation Policies,” also included testimony from Michael Newman, general counsel of the Insurance Institute for Business & Home Safety (IBHS).
“Federal, state, and local government each plays a critical role in advancing policies and investments that result in new construction that is survivable and insurable,” he said, adding decision making should be based on principles of where and how to build, and that public funds should only be invested in resilient structures built to withstand severe weather.
“We know how to make our homes and communities more survivable and insurable,” Newman told the lawmakers. “Translating this knowledge into action requires policy levers that drive consumer behavior, incentivize resilient investments, and catalyze the innovation and might of the private sector. It may not always be easy, but we can do hard things.”
On the state level, IBHS focused on housing programs and building codes, which have recently demonstrated effectiveness when deployed. For instance, Newman explained, an IBHS analysis of thousands of structures after 2022’s Hurricane Ian in Florida found none built to modern codes had wind-driven damage.
Focusing on the role of the federal government, APCIA’s Gordon said there are “ample opportunities for the federal government to enact changes related to litigation that will have a direct impact on lowering anticipated losses and subsequently insurance premiums.”
However, Gordon warned, “Government rate suppression, coverage mandates, state insurance funds displacing private markets, regulatory and infrastructure failures, and escalating inflation and legal costs disrupt markets and can make insurance decreasingly affordable and available.”
Gordon’s testimony included a recommendation to reauthorize the Federal Emergency Management Agency (FEMA)’s National Flood Insurance Program (NFIP) for five to 10 years, with the ability to charge actuarially sound rates.
APCIA also supports federal resilience and mitigation funding through programs such grants for state, local, tribal, and territorial governments to reduce disaster risk, and the Building Resilient Infrastructure and Communities (BRIC) program. FEMA recently ended BRIC, erasing billions of dollars set to be distributed to communities for proactive protection measures.
Related: Loss of FEMA Program Spells Disaster for Hundreds of Communities and Projects
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