Joint investigation into state property insurance launched

Sen. James Skoufis (D-Orange County) announced that he will be part of a joint investigation into New York’s residential property insurance market. The investigation seeks to identify the causes of reported increases in premiums and other obstacles to insuring new and existing single- and multi-family homes, including those occupied by homeowners and renters, and to identify legislation and policy changes that New York State should implement.

According to a 2024 National Bureau of Economic Research study, average residential insurance premiums rose by 33% nationally between 2020 and 2023, with increases varying significantly based on geography. These rising costs contribute to the housing affordability crisis in many areas. Property owners have also been contending with loss of coverage and limited choices. Many states are seeing increased enrollment in insurance of last resort (FAIR) plans, which provide basic coverage for property owners who cannot otherwise obtain standard insurance for their homes. Nearly half a million New York homeowners - or roughly 5% of all homeowners - are uninsured.

Industry analysts cite extreme weather impacts, rising reinsurance costs, inflation, and increased litigation expenses as factors contributing factors to premium increases. The Senate’s investigation and subsequent public hearing will evaluate available evidence regarding the extent to which these or other factors are driving cost increases in New York.

The investigation will also explore whether New York policyholders may be subsidizing insurance company profitability nationally.

As extreme weather events become more frequent, insurance companies may be adjusting how they pool and distribute risk across regions, potentially placing New York property owners in risk pools that do not accurately reflect the actuarial risk appropriate for New York rates. To the extent that risks of extreme weather resulting from climate change are driving increased insurance costs, the committees will explore the question of which are the most appropriate parties to bear these costs.

Jamaal T. Bailey (D-Bronx), and Brian Kavanagh (D-Manhattan), will co-chair along with Skoufis.

“While New York maintains a more robust regulatory environment for its insurance industry than in many other states, property owners continue to face significant premium increases, restrictions in coverage, or outright denials – through no fault of their own,” Skoufis said. “Importantly, while the industry has lost money in many other states around the country, they post enormous profits year after year here in New York, an indication that our residents are being taken advantage of. Our investigation aims to uncover the causes of this insurance squeeze and arrive at real legislative solutions to protect policyholders.”

As of 2023, more than 1,150 property and casualty insurance companies operated in New York, with total assets of approximately $2.6 trillion. The Chairs commenced their investigation last week by delivering information and document requests to the New York State Department of Financial Services and 32 of the state’s carriers, associations, and trade groups. These requests seek ten years of relevant data and focus on costs of premiums and the impacts of recent carrier withdrawals from the state, consumer policy change and cancellation notifications, climate severity impacts, and more. The investigation will further seek information from stakeholders impacted by the rising costs of insuring residential properties including multifamily residential property developers and owners, affordable housing operators, and homeowners, as well as experts on the causes and impacts of climate change and extreme weather events.

The investigation is expected to continue through the fall, culminating with a joint hearing later this year and a published report of the findings and recommendations.