The department said its report is “based on the most comprehensive and granular picture of the homeowners insurance market to date,” and includes more than 330 insurers and more than 246 million homeowners insurance policies “at the ZIP Code level from 2018 to 2022. ,” with an annual average of 49.3 million policies.
As insurance costs rise across the country, significant differences across states and ZIP codes showed that average premiums per policy rose 8.7 percent faster than the annual rate of inflation from 2018 to 2022. national average,” especially for those assessed as living in areas with a high rate of climate risk.
Those communities pay more because they are often affected by “extreme weather events,” the department said.
“From 2018 to 2022, consumers living in the 20% of ZIP codes with the highest expected annual property losses from weather-related perils paid $2,321 in premiums on average, 82% more than those in the ZIP has a low 20% climate risk.”
Other reports have shown that higher premium increases have led to higher non-renewal rates, and the report confirms this by saying that those consumers living within those high-risk ZIP codes “faced high policy non-renewal rates, with non-renewal rates of nearly 80 percent. higher than those in low-risk ZIP codes.” This also reinforces the idea of reducing insurance coverage in high-risk areas, the department said.
Risks caused by climate change are also making it difficult for insurance companies to operate, the report added, due to higher costs in these high-risk areas.
“The Treasury’s analysis comes at a time of heartbreaking tragedy, loss of life, and devastation from the wildfires in the Los Angeles area,” Treasury Secretary Janet Yellen said in a statement. “While it is not yet clear what the financial cost of this disaster will be, it is a stark reminder of the effects of increasing natural disasters on the American economy.”
Yellen added that the situation in Los Angeles “does not stand alone as evidence of this impact, and other weather-related events lead to challenges for Americans in obtaining affordable insurance – from severe storms in the Great Plains to hurricanes in the Southeast.”
The risks outlined in the report underscore the threat to the “long-term prosperity of American families,” she said.
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