Lawmakers to probe sharp property premium rises as affordability concerns mount in high‑risk districts

WASHINGTON — Lawmakers in the United States, Australia and the United Kingdom said this year they will press insurers, regulators and reinsurers for answers after sharp increases in property insurance premiums left households and small businesses struggling to keep coverage in coastal, wildfire- and flood‑prone districts. The scrutiny intensified after a U.S. Treasury Federal Insurance Office report in January showed homeowners in the most climate‑vulnerable ZIP codes paid an average of $2,321 in premiums — 82% more than households in the lowest‑risk ZIP codes — and after national regulators and industry panels in Australia and the U.K. reported rising premiums and uneven benefits from government reinsurance schemes. (home.treasury.gov)

Lawmakers’ actions range from formal state investigations of insurer financial practices to federal hearings, proposed legislation and parliamentary oversight of reinsurance arrangements. The probes are focusing on the causes of rate hikes — including higher reinsurance costs, worsening climate losses, construction‑cost inflation and corporate accounting practices — and on whether intervention is needed to preserve affordability and insurance availability in high‑risk communities. (axios.com)

What lawmakers are doing and why

• In Florida — one of the U.S. states with the steepest price spikes and the largest share of citizens dropping coverage — the state House speaker launched an investigation in March 2025 after a report said insurers had moved billions to affiliated companies while claiming losses, a practice lawmakers say may obscure profitability and justify higher rates. Speaker Daniel Perez said investigators would be given “the full range of tools” to examine the industry’s accounts. (axios.com)
• In Washington, the U.S. Congress and federal regulators have intensified oversight after the Federal Insurance Office released the most granular national homeowners‑insurance dataset to date, prompting hearings and a wave of policymaking proposals, including a House bill introduced in January 2025 to create a federal catastrophe risk consortium and support market capacity for catastrophic coverage. (home.treasury.gov)
• In Australia, federal agencies and parliamentary committees have published monitoring reports and assessments of government‑backed reinsurance arrangements designed to blunt premium rises in cyclone‑exposed regions but which have not yet eased pressures nationwide. Regulators say the cyclone pool has delivered meaningful reductions for some high‑risk policyholders while overall premiums remain high and rising outside those zones. (accc.gov.au)
• In the U.K., parliamentary debate and industry panels have focused on Flood Re and the Build Back Better program, which provide reinsurance and post‑loss mitigation support; ministers and industry officials are under pressure to make flood cover affordable while ensuring the reinsurance mechanism remains sustainable as climate losses rise. (floodre.co.uk)

“Homeowners insurance is becoming more costly and harder to procure for millions of Americans,” the Treasury said in its January report, which combined data from state regulators and the National Association of Insurance Commissioners and covered hundreds of millions of policies. The FIO analysis showed premiums rose faster than inflation and that policy nonrenewal rates have been higher in the most climate‑exposed communities. (home.treasury.gov)

Scale and human impact
The rise in premiums has pushed some households to reduce coverage, accept higher deductibles or go without insurance entirely — trends that lawmakers and consumer advocates say raise systemic and equity concerns. In Australia the ACCC found average home and contents premiums in parts of northern Australia exceed A$3,000 or A$4,600, while strata premiums in some regions have jumped above A$18,000 a year, figures that regulators say undercut affordability in communities with lower incomes. (accc.gov.au)

Consumer groups and independent analysts say affordability stress is widespread. An S&P Global analysis and other industry studies show premiums in Australia have risen faster than wages and inflation, while the Actuaries Institute estimated roughly 15% of Australian households were experiencing insurance affordability stress as of March 2024. In the United States, state‑level reports and consumer organizations documented similar patterns: substantial premium growth in disaster‑exposed ZIP codes, higher nonrenewal rates and localized pockets of near‑uninsurability. (insurancebusinessmag.com)

“People are responding by reducing coverage, increasing excesses and, in some cases, dropping insurance altogether,” ACCC Commissioner Peter Crone told reporters when the agency published its monitoring report, adding that the reinsurance pool had reduced premiums for some, but not for all, exposed policyholders. (accc.gov.au)

Drivers of the premium surge: market and climate forces
Insurers and market analysts point to a convergence of factors that have pushed premiums higher.

• Reinsurance: Global reinsurance capacity tightened after a string of large‑loss events and years of elevated payouts; brokers and reinsurers reported higher reinsurance program costs that feed through to primary insurers’ pricing. The ranking of reinsurance costs and the timing of treaty renewals have created volatility and upward pressure on primary insurers’ rates. (home.treasury.gov)
• Climate losses: More frequent and severe storms, wildfires and floods have increased claims frequency and severity in exposed areas, altering insurers’ view of long‑term risk and prompting re‑underwriting of whole ZIP codes and neighborhoods. The Treasury’s dataset — the largest of its kind — found policyholders in high‑risk ZIP codes bore premiums substantially higher than those elsewhere. (home.treasury.gov)
• Construction and repair costs: Elevated prices for building materials and labor after the pandemic have raised replacement costs, pushing up rates on policies that cover full rebuild expenses. Australian and U.S. regulators and insurers have all flagged construction‑cost inflation as a material driver. (accc.gov.au)
• Underwriting and data granularity: Advances in geospatial modelling and more granular risk segmentation mean insurers price policies at increasingly local levels. That has improved actuarial accuracy but reduced cross‑subsidies that traditionally softened rates for higher‑risk households. Critics say automation and blanket underwriting rules sometimes deny coverage without sufficient individual review. (aph.gov.au)
• Corporate and regulatory structures: Lawmakers in Florida and elsewhere have raised questions about insurer use of affiliated entities and fee allocations that may move profits off balance sheets used to justify rate requests. State investigators are probing whether accounting and affiliate arrangements have a material effect on reported industry profitability and on the credibility of rate filings. (axios.com)

Industry response and government interventions
Insurers and industry groups argue that pricing reflects genuine economic and catastrophe risk realities. The Insurance Council of Australia and major companies have urged greater investment in mitigation and resilient infrastructure, contending that private insurance markets cannot sustainably insure areas where physical risk is rising without public‑sector mitigation or risk‑sharing. The ICA and other industry representatives also pointed to reinsurance market dynamics and inflation as drivers. (insurancenews.com.au)

Governments and regulators have deployed several tools aimed at preserving coverage and reducing premiums for the most exposed households:

• Reinsurance pools: Australia established a cyclone reinsurance pool in 2022 to lower the cost of reinsuring cyclone risk; ARPC and the federal government say the pool has cut premiums in many cyclone‑exposed areas (ARPC reported average reductions of about 39% in the highest cyclone risk areas when compared with pre‑pool levels for some measures), though regulators caution the relief has not been uniform. (arpc.gov.au)
• Levy‑funded schemes: The U.K.’s Flood Re scheme and its Build Back Better initiative aim to keep flood cover widely available and to incentivize property resilience; Flood Re and government testimony point to large numbers of policies supported by the program, but Parliamentarians continue to press for transition planning and long‑term sustainability. (floodre.co.uk)
• State reinsurance and subsidy proposals: In the U.S., proposals range from state purchases of reinsurance to federal legislative initiatives. Colorado legislators considered a state reinsurance buy‑in to reduce wildfire risk exposure on the insurable market; the measure met political resistance amid concern about new fees. At the federal level, bills introduced this year seek to create a national catastrophe risk facility to boost market capacity for catastrophic coverage. (kunc.org)
• Regulatory rate review and settlements: Some states have used rate review and negotiated settlements to cap or moderate requested increases; North Carolina reached an agreement in which base rates would rise about 15% by mid‑2026 after a negotiated settlement between insurers and regulators. Regulators say those approaches can blunt sharp single‑year spikes but do not address longer‑term drivers. (apnews.com)

“By reducing the reinsurance cost burden for insurers, we’ve seen the pool deliver downward premium pressure — making it possible for more Australians to access the protection they need,” Dr. Christopher Wallace, chief executive of the Australian Reinsurance Pool Corporation, said in May 2025 as ARPC released its premium assessment. At the same time, both ARPC and the ACCC cautioned that the pool cannot by itself offset other cost pressures and that more mitigation and regulatory action are required. (arpc.gov.au)

Political fault lines and accountability questions
The premium surge has produced a rare political alignment: consumer advocates and some lawmakers want stronger oversight and relief for vulnerable policyholders; the insurance industry says the market must price risk accurately and that public subsidies risk moral hazard.

Consumer groups welcomed the Treasury data dump and urged lawmakers to probe industry practices. “This is a critical first step,” Alexandra Grose of Consumer Reports said after the FIO released its analysis, but she and other advocates called for continued disclosure and for policy solutions that protect low‑income households. (advocacy.consumerreports.org)

In several jurisdictions the political debate has hardened. In Florida, the probe announced by Speaker Daniel Perez followed reporting that alleged insurers transferred tens or hundreds of millions of dollars to affiliates while reporting underwriting losses — an allegation that prompted bipartisan calls for enhanced oversight even as industry representatives warned against overturning tort‑ and rate‑reform laws aimed at stabilizing the market. “We will use the full range of tools to get answers,” Speaker Perez said when announcing the inquiry. (axios.com)

Regulators say the right balance is transparency and targeted intervention. Treasury’s report recommended more granular public data and stronger coordination between federal and state authorities so lawmakers can design targeted relief without encouraging development in poorly defended hazard zones. S&P Global and other analysts warned that blanket governmental backstops can create “false signals” about safety and dampen incentives for mitigation unless coupled with land‑use and resilience policies. “Government schemes can create a false sense of protection by deviating from the risk‑based price,” an S&P Global analyst said in a March 2025 webinar. (home.treasury.gov)

Equity and market‑stability concerns
Legislators and analysts worry the current trajectory will create geographic and socioeconomic stratification in risk transfer: wealthier households and commercial properties will remain insured at higher cost, while middle‑ and lower‑income households may reduce or drop coverage, shifting more disaster cost to government relief and credit markets.

Parliamentary testimony in Australia cited evidence that many high‑risk households are concentrated in lower‑income regions: a government minister noted that, among the 242,000 homes at highest flood risk, roughly 70% are in areas with average incomes below the national median, leaving the most exposed populations least able to absorb rising premiums or higher excesses. Regulators warned that growing underinsurance could threaten mortgage markets, rental affordability and local fiscal bases that depend on housing stability. (ministers.treasury.gov.au)

What lawmakers are demanding from insurers and reinsurers
Investigations and hearings are focusing on a short list of transparency and conduct questions that lawmakers hope will yield immediate relief or policy changes:

• Clear accounting of affiliate transactions and distribution of profits, to ensure rate filings reflect underlying financial health and are not inflated by related‑party charges. (Florida probe.) (axios.com)
• Disclosure of reinsurance program costs and the timing of treaty renewals so regulators can assess the pass‑through effect to retail rates. (Congressional and Treasury interest.) (home.treasury.gov)
• Evidence that insurers meaningfully recognise private mitigation measures and reward policyholders for resilience investments, a step regulators say would align pricing with risk reduction. (ACCC findings.) (accc.gov.au)
• Assessments of policy nonrenewal and underwriting “embargo” practices that can create pockets of uninsurability, including whether automated underwriting disproportionately affects certain communities. (Consumer‑advocate concerns and California legislative interest in aerial imagery rules.) (calmatters.digitaldemocracy.org)

Tradeoffs and policy choices ahead
Lawmakers face difficult choices. Direct subsidies or levy‑funded reinsurance can blunt price shocks and preserve market capacity, but they can also support continued occupation of high‑hazard areas and create budgetary commitments that grow with climate losses. Conversely, market‑led risk‑reflective pricing discourages risky development but risks leaving low‑income households exposed unless paired with targeted assistance and robust mitigation programs.

Several policy pathways have emerged in recent debates:

• Targeted reinsurance or pooling with clear sunset and transition plans that require mitigation and land‑use reforms (approaches under discussion in the U.K. and Australia). (floodre.co.uk)
• Rate‑setting or negotiated settlements that smooth increases while regulators and insurers invest in mitigation and claims‑cost control (some U.S. states have used this tool). (apnews.com)
• Means‑tested subsidies or tax incentives to help lower‑income households afford coverage and to encourage private mitigation measures, as proposed in several state and federal policy forums. (kunc.org)
• Improved transparency and mandated disclosure so lawmakers and regulators can better monitor insurer conduct and profitability without broad market distortions. (Calls from consumer groups and Treasury.) (advocacy.consumerreports.org)

What to watch next
Lawmakers’ probes in 2025 and 2026 — from Florida’s state House committee to Congressional hearings and parliamentary questions in London and Canberra — could yield a mix of narrow consumer‑protection rules, expanded data disclosure requirements and larger structural proposals such as public reinsurance facilities or federal catastrophe consortia. The Homeowners’ Defense Act introduced in the U.S. House in January 2025 is an example of broader federal legislative thinking about creating shared capacity for catastrophic risk; whether such large measures gain bipartisan traction remains uncertain. (congress.gov)

Industry executives say they will cooperate with reasonable oversight while warning against measures that could undermine market discipline. “Insurers are facing a hard market,” an industry conference summary noted, pointing to climate‑driven loss trends and reinsurance cost volatility as the main commercial drivers. Regulators and consumer groups say cooperation must translate into tangible reductions in premiums where reinsurance or public programs have reduced insurers’ cost base, and into better consumer communication about mitigation and coverage options. (insurancenews.com.au)

As lawmakers press insurers and regulators for answers, households in high‑risk districts are left weighing whether they can continue to finance adequate protection or will accept greater financial exposure. The outcome of the probes will determine whether reform efforts can preserve the private market’s ability to share climate risk affordably — or whether governments will be compelled to intervene more directly to ensure basic protection for at‑risk communities. (home.treasury.gov)

— Reporting contributed by staff in Washington, London and Sydney. Sources include the U.S. Department of the Treasury Federal Insurance Office, the Australian Competition and Consumer Commission, the Australian Reinsurance Pool Corporation, Flood Re and reporting by Axios and the Associated Press. (home.treasury.gov)