Insurance Costs, Housing Top Issues In House ESG Hearing
House subcommittee members tussled Friday over rising insurance costs, housing shortages and new conservation standards for manufactured housing in a hearing nominally focused on the purported ills of environmental, social or governance aims.
In a hearing that by turns drew mentions of “cancel culture,” the imploded Titan submersible and a rottweiler named Satan, members of the House Housing and Insurance Subcommittee peppered experts with questions on insurance regulations, discrimination in financial markets and land use and construction best practices.
On the reinsurance front, Jerry Theodorou, a policy director with the right-leaning R Street Institute, told Rep. Blaine Luetkemeyer, R-Mo., that there existed a Catch-22 in California, where state regulators don’t permit carriers to consider reinsurance prices when underwriting. That was a key frustration two Allstate executives expressed at a meeting on catastrophe models hosted July 14 by California insurance regulators.
While reinsurance costs go up because of increasing risks, insurance companies have their hands tied and aren’t allowed to raise rates beyond a limit, Theodorou said.
“It’s unfortunate that California can’t use reinsurance to its benefit,” he said.
Reinsurance prices are taking on more of a focus as midyear renewals showed insurance companies would need to pay up to 50% more to help cover their losses, per a Gallagher Re report this month. Nagy said the reinsurance sector is largely global and outside U.S. regulatory powers, which should give lawmakers reason to consider implementing a public reinsurance system that states could opt into.