Category Archives: Insurers and the Economy

Insurance Industry, Insurers and the Economy, Reinsurance and E&S

Triple-I Features Lloyd’s in Latest Issue Brief

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A diagram of Lloyd's, depicting the integration of the 3 core groups in the marketplace: Members, Syndicates, and Managing Agents

Triple-I’s latest Issues Brief, Lloyd’s: Trends and Insights, spotlights one of the world’s leading specialist insurance and reinsurance marketplaces. The brief explains how the nearly 350-year-old platform has functioned differently from the common stand-alone model while evolving into an integral source of capacity and resilience for the global 21st-century risk landscape.

Contrary to a common misperception, Lloyd’s is not a single insurer; rather it’s a marketplace – i.e. hub, network, platform – connecting risk brokers, underwriters, and capital providers who negotiate the transfer of risk. It consists of three core groups:

  • Members: Persons or corporate entities that provide the capital that funds a syndicate.
  • Syndicates: An accounting construct with assets, liabilities, and Profit and Loss (P&L) statement segregated from those of other Lloyd’s syndicates.
  • Managing Agents: Entities appointed by syndicate members to handle underwriting and claims, as well as oversee the governance and operations on behalf of the syndicates.

The arrangement allows policies to have multiple underwriters, enabling each underwriter to  take on more risk than they would have the appetite for as a sole underwriter. As a result, complex and hard-to-place risks can be covered.

​Another distinctive feature of Lloyd’s is its capital structure, also known as the “Chain of Security.”  The brief explains how the Chain of Security is designed to provide the financial backing for all insurance policies written at Lloyd’s. As a result of this setup, the major rating agencies typically apply a single financial strength rating (FSR) to all the policies written through Lloyd’s, regardless of which syndicates participate in the policy.

Successful handling of long-tail and complex risks –  where claims may emerge decades later  –  can be vital to fostering confidence in the larger insurance industry. Throughout its long history, Lloyd’s has been called upon to absorb extreme and unexpected losses while paying claims and recapitalizing. This track record includes playing a key role in supporting U.S. economic recovery, from major disasters, such as the 1906 San Francisco earthquake, the September 11 attacks, Hurricane Katrina, and more recent hurricanes and wildfires.

Managing uncertainty in today’s fast-evolving risk landscape can require keeping abreast of interconnected threats that outpace traditional risk management strategies. Insurers and risk managers can improve the prediction and prevention of emerging threats across core strategic areas:

  • ​advancing analytics capabilities
  • strengthening capital resilience
  • collaborating across the industry

Centering these objectives, Lloyd’s cultivates channels for talent development, innovation, and new capital flows.

For example, its London Bridge 2 (LB2) platform gives institutional investors a flexible and efficient means to deploy funds into the Lloyd’s market, attracting approximately $2.5 billion in new capital since its launch in 2022. Lloyd’s education platform supports the sustainable growth of the market by equipping professionals with the insight needed to navigate the emerging risk landscape. And, Lloyd’s Lab – a product development accelerator designed to rapidly develop, test, and refine new products, concepts, and solutions – supported 48 U.S. startups, which collectively have raised $490 million to scale solutions tackling wildfire, flood, and cyber risks.

The United States is Lloyd’s largest market, accounting for roughly half of the marketplace’s global premiums. Excess and surplus underwriting accounts for over 60 percent of Lloyd’s total premiums written in the U.S. In 2024, this share worked out to $20.8 billion in surplus lines insurance capacity, approximately 16 percent of the entire U.S. surplus lines market.  Additionally, Lloyd’s gross written premiums for U.S. reinsurance totaled $9.86 billion in 2024, with the marketplace ceding around $2.9 billion annually in reinsurance premiums to U.S. reinsurers.

This special edition of the Triple-I issue brief series is part of ongoing efforts to educate and raise awareness about how insurance market participants support coverage affordability and availability.

Homeowners Insurance, Insurers and the Economy, Legal Environment

Take Care in Addressing Homeowners’ Premiums, Bloomberg Cautions Policymakers

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By Jeff Dunsavage, Senior Research Analyst, Triple-I

While rising homeowners’ insurance can be a problem for some consumers, a recent Bloomberg editorial cautions policymakers against pursuing “simplistic solutions, such as capping premiums, subsidizing homebuyers, or punishing investors.”

Instead, it recommends taking steps to increase investment in catastrophe resilience and mitigate claim cost drivers, such as legal system abuse.

Bloomberg attributes slumping condominium prices and rising rents, in part, to increasing homeowners’ insurance premiums.

“Average homeowners insurance premiums rose almost 25 percent from 2019 to 2024 in real terms,” the editorial says. While politicians “have been quick to blame greedy insurers,” the reality is more complicated. Contributing factors include:

  • Increasingly costly disasters – evidenced by a sharp increase in billion-dollar catastrophes. In 2025, Bloomberg says, insured losses from such calamities reached $108 billion.
  • Insufficient investment by states in disaster resilience measures, “such as retrofitting public works and enforcing appropriate building codes”.
  • Escalating legal costs that are passed on to homeowners.

“In many states,” Bloomberg says, “underwriters must contend with laws that favor plaintiffs, outsized jury awards, and a proliferation of funds that specialize in financing lawsuits. Research suggests that such costs have been the single biggest driver of premium increases in recent years.”

Also feeding higher premiums are increased replacement costs related to record inflation during and since the COVID-19 pandemic.

In attempts to address these rising costs, several states in recent years have introduced legislative measures that would do more harm to homebuyers than good. Illinois insurers last year narrowly avoided increased government involvement in insurance pricing as state legislators rejected “an extreme prior-approval system found nowhere else in the country,” according to a joint statement from the American Property Casualty Insurance Association, the National Association of Mutual Insurance Companies, and the Illinois Insurance Association.

When California tried to artificially suppress premiums, “underwriters fled the market and left homeowners and the state’s insurer of last resort exposed to last year’s horrific wildfires”.  Since then, the state has allowed significant premium rate increases to lure insurers back.

Bloomberg recommends that states start by prioritizing the resilience of buildings and public works.

“Tax breaks and grants for hardening homes against floods, fire, and wind are a short‑term expense with long‑term benefits,” the editorial says, citing research that found communities lose as much as $33 in future economic activity for every $1 not invested in preparedness.

“The federal government, for its part, should commit to restoring FEMA’s pre‑disaster mitigation program and similar efforts,” Bloomberg says. “With strong oversight, such investment can protect property, limit job losses, accelerate rebuilding, reduce premiums, improve public health, and ultimately save money and lives.”

When it comes to litigation trends that put upward pressure on claim costs and, ultimately, premium rates, Florida offers an encouraging example.

“In 2021, the state was home to 6.9 percent of homeowner claims but 76 percent of the lawsuits against insurers,” Bloomberg says. “State lawmakers enacted reforms over the next two years that limited plaintiffs’ ability to allege negligence and recoup expenses, with significant results: At least 17 new insurers entered the market and dozens reduced premiums.”

Triple-I, its members, and its partners have long been engaged in helping policymakers and the public understand the forces that affect insurance affordability and availability and how they can help mitigate the factors that drive up costs.  

“It’s refreshing to see this type of thoughtful analysis of the homeowners’ insurance market by an authoritative financial news organization like Bloomberg,” said Triple-I CEO Sean Kevelighan.  “Consumers and policymakers need to understand that higher premiums are a symptom of the current risk environment, not its cause.”

Learn More:

Triple-I Testifies on New York Insurance Affordability

Florida Governor Touts Auto Insurance Rebates, Tort Reform Success

Resilience Investment Payoffs Outpace Future Costs More Than 30 Times

JIF 2025: U.S. Policy Changes and Uncertainty Imperil Insurance Affordability

Allstate, Aspen Initiative Seeks to Ease Trust Gap

Illinois Lawmakers Reject Risk-Based Pricing Challenge

New Illinois Bills Would Harm — Not Help — Auto Policyholders

Insurance Affordability, Availability Demand Collaboration, Innovation

Disasters, Litigation Reshape Homeowners’ Insurance Affordability

Tariff Uncertainty May Strain Insurance Markets, Challenge Affordability

Affordability, Auto Insurance, Insurers and the Economy, Legal Environment

New York Among
Least Affordable States for Auto Insurance

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By Lewis Nibbelin, Research Writer, Triple-I

New Yorkers pay the fourth-highest personal auto expenditures in the United States, costing households an average of $1,935 in 2024, or 2.23 percent of the state’s median household income, according to Triple-I’s latest Affordability Outlook.

Up from New York’s average of $1,753 in 2023, Triple-I’s estimates reflect the burgeoning toll of several expenditure cost drivers in the Empire State, many of which are structural factors beyond the insurance industry. Citing data from the Insurance Research Council (IRC) – like Triple-I, an affiliate of The Institutes – the report highlights four cost drivers that rank among the highest in the country, including:

  • Repair costs: New York has the third-highest auto repairs costs in the United States, at $864 more than the national average;
  • Carrier expense index: New York has the third-highest carrier expense index for personal auto insurance, at 14.9 percent of losses;
  • Injury claim costs: New York has the third-highest average injury claim severity in the country, at more than twice the national average; and
  • Accident frequency: New York has the eighth-highest average frequency of personal auto accidents in the nation, at 3.09 accidents.

While traffic density, road conditions, and driver education can contribute to accident frequency and severity, excessive and fraudulent claims litigation also fuel rising auto insurance premiums and overall costs in the state. Wiping out billions of dollars in U.S. economic activity annually, legal system abuse costs New York residents 427,794 jobs and $7,027 for each household per year, earning the state a recurring spot on the American Tort Reform Foundation’s list of “judicial hellholes.”

A surge in staged crashes underpins these figures, leaving drivers increasingly vulnerable to fraudulent damage or injury claims. Such incidents – totaling 1,729 in New York in 2023 – keep upward pressure on auto rates for all policyholders, inflating average auto premium by as much as $300 per year, Triple-I estimates.

To alleviate these cost burdens, a package of state budget proposals was recently unveiled to secure $2 million in funding for investigations into alleged auto fraud and introduce new regulations that extend the timeframe for carriers to report suspicious claims. Another law would cap pain and suffering damages awarded to drivers who engaged in criminal behavior, such as those who were uninsured at the time of the incident.

New York policymakers also passed legislation last month aimed at third-party litigation funding (TPLF), or funding from often anonymous investors who can delay prompt settlements in exchange for a share of larger damage awards, thereby propelling claims costs. Though falling short of mandating TPLF disclosure during litigation, the new law parallels effective tort reforms in other states, offering hope toward insurance market stability.

Homeowners insurance holds steady

Conversely, New York’s homeowners insurance premiums “are relatively average and reasonable as a percentage of household income,” contradicting “the narrative of an affordability crisis in New York’s homeowners insurance market,” said Patrick Schmid, Triple-I’s chief insurance officer, in written testimony to state lawmakers.

With a 2.11 percent ratio of homeowners insurance expenditure to median household income, New York ranks 29th in an affordability study by the IRC, suggesting property and replacement costs contribute to the state’s housing affordability issues.

Policy interventions in insurance markets “would address a symptom rather than the cause” of such issues, Schmid stressed, urging lawmakers to focus instead on improving building material and labor costs; litigation trends; and other inflationary pressures.

While the specific policy levers may differ, Florida’s legal reforms in 2022 and 2023 led to 17 new insurance companies entering the state and rate reductions for dozens of homeowners and auto insurers, including a 6.5 percent average rate decrease for the state’s top five personal auto insurers in 2025.

Once a “poster child” for legal system abuse, Florida’s success demonstrates the need for continued reform in 2026 to promote a more competitive insurance market and greater affordability for consumers.

Learn More:

Triple-I Testifies on New York Insurance Affordability

Florida Governor Touts Auto Insurance Rebates, Tort Reform Success

Litigation Reform Works: Florida Auto Insurance Premium Rates Declining

Insurance Affordability, Availability Demand Collaboration, Innovation

Disasters, Litigation Reshape Homeowners’ Insurance Affordability

Auto Insurance, Business Insurance, General Liability, Homeowners Insurance, Insurers and the Economy, Market Conditions, Workers Compensation

Resilient U.S. P/C Market Performance Sets Stage for a Complex 2026

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By William Nibbelin, Senior Research Actuary, Triple-I 

The U.S. property/casualty insurance industry demonstrated notable resilience throughout 2025, navigating a landscape marked by significant regional catastrophes and shifting economic pressures, according to the latest Insurance Economics and Underwriting Projections: A Forward View report from Triple-I and Milliman.

As the industry moves into 2026, the report notes, it does so from a position of historical strength yet faces an increasingly nuanced outlook shaped by market softening and lingering macroeconomic uncertainties.

The Triple-I/Milliman report is based on data through the third quarter of 2025,

Industry-Wide Performance and Profitability

The P/C insurance industry is forecast to achieve its lowest net combined ratio (NCR) in over a decade for the full year 2025. This achievement is particularly significant, given the challenges faced early in the year, including the devastating Los Angeles wildfires in January 2025.

A key driver of this success was the first Atlantic hurricane season with no U.S. landfall in 10 years. However, while profitability reached peak levels, top-line growth began to moderate. Aggregate net premium growth across all lines for 2025 is expected to be 5.9 percent, reflecting a continued slowing of the growth rate compared to 2024.

“We’re on track to achieve the lowest net combined ratio in over a decade, thanks in part to a hurricane season that spared the U.S. and strong homeowners performance, even after the Los Angeles fires in Q1 2025,” said Patrick Schmid, Ph.D., chief insurance officer at Triple-I. “Growth in personal lines premiums remains solid, and the narrowing gap between personal and commercial lines performance points to a cautiously optimistic outlook for the industry.”

Economic Outlook: Stability Meets Vulnerability

While the broader U.S. economy and the P/C sector remain stable, economists are keeping a close watch on emerging risks. The industry’s ability to maintain its momentum in 2026 may be tested by rising political and geopolitical tensions, as well as potential shifts in the labor market.

“Overall, the P/C insurance industry and the broader U.S. economy remain stable,” said Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I. “However, despite stronger-than-expected GDP growth in the third quarter, a closer look at the data suggests the U.S. economy may be increasingly vulnerable to rising economic, political, and geopolitical uncertainty. In particular, P/C replacement costs could still see significant increases in 2026, weighing on overall P/C performance.”

Léonard further highlighted that the labor market serves as a critical indicator, noting that a rise in the unemployment rate toward 5.0% over the next six months could potentially trigger an economic contraction.

Underwriting Results by Line of Business

Personal lines continue to anchor the industry’s profitability. Personal auto remains a standout performer with a forecast 2025 NCR of 94.4, an improvement over 2024 results. However, premium growth in this sector has slowed significantly, with net written premium growth expected to land at 3.6 percent — its lowest level since 2020. Homeowners’ insurance also showed remarkable recovery. Despite the heavy losses from the Los Angeles fires in the first quarter, the line’s 2025 NCR is forecast at 99.6, placing it on par with 2024 performance.

Commercial lines continue to face ongoing challenges in liability. While most of the industry enjoys profitability, general liability and commercial auto remain the only major lines forecast to stay above a 100 NCR for 2025. General liability continues to struggle with the highest Q3 direct incurred loss ratio reported in over 15 years.

Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, detailed these persistent hurdles.

“General liability faces continued challenges,” Kurtz said. “Our 2025 net combined ratio is forecast to be similar to 2024, among the worst in over a decade. Losses are high, with Q3 direct incurred loss ratios being the highest in at least 25 years.”

He added, “While conditions may improve in 2026-2027, profitability remains a hurdle. Our general liability’s NCR expectations have risen following a challenging Q3, reflecting ongoing pressure in the segment. While some coverages are experiencing soft market conditions, aggregate premiums have been growing, but not enough to keep pace with loss trends.  We anticipate additional premium growth will be needed to improve general liability profitability.”

Workers’ compensation remains the strongest performing major line, with NCRs forecast to stay in the high 80s to low 90s through 2027. This sustained success is attributed to disciplined risk management and favorable prior accident year development.

“NCCI’s latest loss ratio trends continue to show declines,” said Donna Glenn, NCCI chief actuary. “In the current environment, modest year-to-year decreases are still expected.” Glenn noted that “while there have been a few rate increases filed in NCCI states, every state has its own story, and based on the latest data, NCCI does not anticipate any imminent reversal of current trends.”

Affordability, Auto Insurance, Insurers and the Economy, Legal Environment, Regulation

La. Auto Insurance Rates Benefit From Declines
in Frequency, Severity

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By Lewis Nibbelin, Research Writer, Triple-I

More than 20 requests for auto insurance rate decreases have been filed with Louisana’s Department of Insurance by insurers since mid-2025. According to the department, the decreases were driven by reductions in accident frequency and severity.

“I’m glad to see positive movement on auto rates in Louisiana for the first time in years,” said Louisiana Insurance Commissioner Tim Temple. “Because fewer accidents are contributing to these lower losses for insurers, we should not necessarily expect to see this level of decrease in future years unless we continue to pursue legal reform that addresses the foundational reasons our rates are the highest in the country.”

Temple said he hopes for further rate changes as the market continues to stabilize, citing Florida’s recent premium reductions after sweeping tort reform legislation in 2022 and 2023.

Longstanding affordability challenges

Among those who filed for rate decreases include Louisiana’s largest auto insurers, with the latest reductions impacting nearly 470,000 Progressive policyholders, or roughly 23.5 percent of the state’s auto market. More than one million State Farm policies also achieved lower average rates implemented this month.

While the statewide decreases can offer relief for drivers in one of the least affordable states for auto insurance, Temple cautioned that rates for individual policyholders will differ based on personal risk factors, urging consumers to shop among the “30 companies that have taken a rate decrease.”

The announcement arrives less than a year after Louisiana lawmakers passed a 2025 tort reform package to curb excessive lawsuits and a rate of bodily injury claims more than twice the national average. Beyond fueling higher insurance premiums in the state, such practices generate an annual $965 “tort tax” on every Louisianan and cost over 40,562 jobs per year, as highlighted by Triple-I’s consumer awareness campaign to build support for the reforms.

Other 2025 legislative measures, however, stipulate increased regulatory intervention in rate-setting, which can create further strain on an insurance market just beginning to recover. Another bill targeting nuclear verdicts (awards of $10 million or more) also failed to pass, playing a role in the state’s recurring spot on the American Tort Reform Foundation’s annual list of “judicial hellholes.”

Noting that reduced accident frequency contributed to the rate changes, Temple said in a statement that “we should not necessarily expect to see this level of decrease in future years unless we continue to pursue legal reform that addresses the foundational reasons our rates are the highest in the country.”

Lessons from Florida

Measurable benefits from Louisiana’s existing reforms may require a few more years to unfold, Temple added, based on the trajectory of similar legislation in Florida. In 2022, Florida accounted for over 70 percent of the nation’s homeowners claim-related litigation, despite representing only 15 percent of homeowners’ insurance claims, according to the state’s Office of Insurance Regulation (OIR). State legislators responded to the crisis with several tort laws that, among other things, eliminated one-way attorney fees and assignment of benefits (AOB) for property insurance claims.

Under the reforms, 17 new insurance companies have entered the Sunshine State and dozens of homeowners’ and auto insurers have filed for rate decreases, with Citizens Property Insurance – the state’s insurer of last resort – approved for major average rate cuts this spring, according to a recent announcement from Florida Gov. Ron DeSantis.

A 50 percent drop in Citizens policies in 2025 helped facilitate the cuts, reflecting the largest transition of policies back to the private market in a decade. Later that year, additional cost-savings achieved through the reforms helped state regulators secure nearly $1 billion in premium refunds for Progressive auto insurance policyholders in the state.

Though the specific policy levers may differ, Florida’s reforms continue to model the kinds of market improvements that states like Louisiana and Georgia can expect after successfully passing their own tort legislation. State government moves like these are essential to eradicating legal system abuse and keeping insurance affordable and available, especially as legislative challenges to legal reform persist.

“Premiums are lowering because we’ve enacted real reforms and withstood the pressure to reverse course,” DeSantis said. “We will hold firm in our commitment not to go back to the broken insurance market of the past.”

Learn More:

Significant Tort Reform Advances in Louisiana

Florida Governor Touts Auto Insurance Rebates, Tort Reform Success

Litigation Reform Works: Florida Auto Insurance Premium Rates Declining

Louisiana Senator Seeks Resumption of Resilience Investment Program

Louisiana Reforms: Progress, But More Is Needed to Stem Legal System Abuse

Who’s Financing Legal System Abuse? Louisianans Need to Know

Industry Financials, Insurers and the Economy, Market Conditions, Technology

PWC: A.I. Megadeals Spur Insurance M&A Growth

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By Lewis Nibbelin, Research Writer, Triple-I

Deals exceeding $1 billion drove insurance industry mergers and acquisitions (M&A) in 2025, aligning with a surge of artificial intelligence-based megadeals in the broader M&A market, according to PwC’s U.S. Deals 2026 Outlook. While total M&A deal value rose to $1.6 trillion through November 30 – the second-highest value ever recorded – the insurance sector remained consistent, though ongoing economic uncertainty could challenge this stability.

Upward trends emerge

Owing 93 percent of its value to megadeals, the insurance industry’s deal volume totaled $31.8 billion during the second half of 2025, compared to $30 billion during the previous six months. Heading into 2026, PwC projects that both improved loss ratios and rising pressure on property and casualty rates will facilitate further deals, as the industry’s performance can attract investors while also leading carriers to seek growth through more acquisitions.

“In coming months, expect interest rate developments and an industry-wide search for growth to strongly influence insurance deals activity,” said Mark Friedman, PwC U.S. insurance deals leader.

Conversely, total M&A market value increased by 45 percent from 2024, with more than 20 percent of its 74 deals valued at $5 billion or more relating to A.I. Such market activity suggests “A.I. is significantly accelerating software and consumer goods development” by boosting portfolio strategies, operational efficiencies, and other gains across various industries, the report notes.

Ramzi Ramsey, a senior managing director at Blackstone Growth, emphasized the increasing role of A.I. as a core driver of M&A growth, arguing that “companies who are viewed to benefit from AI tailwinds are seeing outsized multiples and deal activities,” whereas “companies where AI is viewed to be a detractor, or if the AI impact is cloudy, may have no bid.”

Middle-market lags

Though still the third-largest in the past decade, overall M&A market volume rose by only 2 percent from 2024, with middle-market deals between $100 million to $1 billion slumping to their lowest volume since at least 2013. Tariff policy shifts largely fueled these figures, reflecting greater caution among dealmakers – particularly smaller businesses – as supply-chain risks became more unpredictable.

While sudden policy changes and recent trade disputes could persist into the new year, PwC’s report found that “interest rate cuts this year have already helped mid-tier corporates, and further Federal Reserve Board action in 2026 could go a long way in relieving pressure on them,” especially as current tariff policies continue to stabilize.

In combination with declining interest rates, “products that can withstand declining consumer performance and confidence” should help the insurance sector remain active in 2026, the report adds, pointing to A.I. investments as essential to maintaining “solid ground” in the M&A market.

Learn More:

Inflation, replacement costs, climate losses shape homeowners’ insurance options

Despite Headwinds, P/C Insurance Industry Maintains Course in 2025

JIF 2025: U.S. Policy Changes and Uncertainty Imperil Insurance Affordability

Affordability, Disaster Preparedness, Disaster Resilience, Homeowners Insurance, Hurricane, Insurers and the Economy, Roof Condition, Severe Convective Storm, Tornado, Wind

Storm-Resistant Roof Efforts Gain Ground

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By Lewis Nibbelin, Research Writer, Triple-I

Severe convective storms cost insurers an estimated $46 billion in the first three quarters of 2025, Gallagher Re has reported, marking the third straight year of U.S. claims from these events through September exceeding $40 billion. Total losses from these storms – which include tornadoes, hail, straight-line winds, and drenching thunderstorms – reflect growing impacts from inland flooding and, in particular, the vulnerability of roofs to damage from these storms.

Approximately 70 to 90 percent of total insured residential catastrophic losses arise from roof-related damage, according to Insurance Institute for Business & Home Safety (IBHS) estimates. Though poorly maintained roofs contribute to this finding, outdated building codes exacerbate the risk, leading insurance industry leaders to advocate for widespread adoption of FORTIFIED roof standards.

Developed by IBHS, FORTIFIED standards can reduce severe weather damage in new or retrofitted homes through construction methods like sealing roof decks and anchoring roofs to wall framing using stronger nails. While such standards remain voluntary, Louisiana has modelled the proactive approach needed to facilitate adoption with the recent expansion of its Louisiana Fortify Homes Program, which began offering homeowners thousand-dollar grants to retrofit their houses along these guidelines in 2023, incentivizing roughly 40 percent of the now 10,000 FORTIFIED roofs in the state.

“FORTIFIED roofs are the long-term solution for affordable insurance in South Louisiana,” said state insurance commissioner Tim Temple, noting that his office aims to implement bigger and more standardized insurance discounts for FORTIFIED homeowners to reinforce the state’s already improved insurance rates.

An emerging trend

Though Louisiana became the “fastest-growing state” to adopt FORTIFIED standards, Alabama pioneered incentivizing them through its own Strengthen Alabama Homes program, financed by the insurance industry with more than $86 million in grants since 2016. Designed to enhance community resiliency while also lowering insurance rates, completed retrofits qualify residents for premium discounts ranging from 25 to 55 percent.

A May 2025 study from the Alabama Department of Insurance, in collaboration with the University of Alabama Center for Insurance Information and Research, showcases the program’s success, highlighting that FORTIFIED homes suffered less property damage and fewer insurance claims than homes built using other construction methods when Hurricane Sally made landfall in the state.

“The Center’s Hurricane Sally report doesn’t just quantify the effectiveness of the FORTIFIED program, it clearly demonstrates that homes can be built to survive storms, making them eminently more insurable,” said IBHS CEO Roy Wright. “This report should be a clarion call to communities across the country, urging them to implement Alabama’s multipronged approach to promoting disaster mitigation.”

Insurers answered the call in Oklahoma, North Carolina, and South Carolina, all of which boast similar programs backed by the insurance sector and accompanying premium reductions. Mississippi nearly joined their ranks before state funding for the grant program was suspended earlier this year, though insurance discounts remain available. States such as Florida, Georgia, and Minnesota also offer comprehensive insurance discounts for FORTIFIED properties, with the latter poised to fully replicate a grant program in response to mounting hailstorms.

Addressing cost concerns

While 75 percent of homeowners express willingness to invest in weather-resistant features, only 18 percent have reinforced or replaced their roofs with those materials, a recent Nationwide survey reveals. Grants help lower the cost of entry to FORTIFIED roofs for many homeowners, but it is worth noting the relative affordability of such upgrades, which can cost as little as $500 for a 2,000 sq. ft. home.

Describing the benefits of FORTIFIED standards as “measurable and increasingly essential,” Nationwide Property & Casualty president and COO Mark Berven emphasized the crucial role insurance agents play in raising consumer awareness of these risk reductions and their broad accessibility.

“Our industry needs to remind homeowners they have control in the face of severe weather events,” Berven wrote. “By investing in resilience, they can take an active role in protecting their homes, their valuables and their memories – giving them the peace of mind they’re looking for.”

Learn More:

Why Roof Resilience Matters More Than Ever

Study Touts Payoffs From Alabama Wind Resilience Program

Resilience Investment Payoffs Outpace Future Costs More Than 30 Times

Outdated Building Codes Exacerbate Climate Risk

FEMA Highlights Role of Modern Roofs in Preventing Hurricane Damage

Louisiana Senator Seeks Resumption of Resilience Investment Program

Affordability, Homeowners Insurance, Insurers and the Economy, Market Conditions

Triple-I Chief Economist Testifies on NYC Measure On Short-Term Rentals

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By Loretta Worters, Vice President – Media Relations, Triple-I

Triple-I Chief Economist and Data Scientist Dr. Michel Léonard provided insurance insight to the New York City Council’s Committee on Housing and Buildings as they consider Local Bills 948-A and 1107-A. The measures aim to address New York City’s housing-affordability challenges by expanding homeowners’ ability to earn income through short-term rentals.

Léonard’s testimony focused on helping policymakers understand the protection gaps that can arise when residential dwellings are used for commercial purposes. He began by emphasizing Triple-I’s role as a nonprofit research and education organization, not a lobbying entity.

Many homeowners, Léonard noted, are unaware that standard homeowners’ policies generally exclude commercial activity, meaning hosts who fail to update their coverage may face denied claims, inadequate liability protection, or higher out-of-pocket costs if a loss occurs. Because short-term rentals fall under commercial use, homeowners who rent out their homes — whether occasionally or regularly — may inadvertently operate without appropriate coverage.

Operating a short-term rental typically requires:

  • Notifying their insurer,
  • Adhering to policy terms, and
  • Obtaining short-term rental-specific or commercial coverage.

Committee Chair Pierina Ana Sanchez asked what the cost impact might be for homeowners who must shift to a commercial policy. Léonard explained that, while costs vary, the more pressing issue is that many homeowners are unaware they have gaps in coverage.

This means homeowners, renters, and residents could all face significant financial or liability risks if an incident occurs. These risks are especially complex in multi-unit buildings, where short-term rental activity can affect both an individual unit’s policy and the building’s master policy—potentially increasing premiums and liability exposure for all residents. The result can be large uncovered losses, disputes, or claims that ripple throughout buildings and neighborhoods.

Homeowners insurance in New York City is significantly different from New York State. In written testimony to the New York Senate Committees on Investigations and Government Operations, Insurance, and Housing, Construction, and Community Development on Tuesday, November 18, Triple-I Chief Insurance Officer Patrick Schmid cited data from the Insurance Research Council (IRC), saying New York ranks 29th in its homeowners’ affordability study, with a 2.11 percent ratio of homeowners’ insurance expenditure to median household income. This is a lower percentage than a decade earlier for the state. According to IRC, New York’s homeowners’ insurance expenditures equal 0.39 percent of median.

Insurance in New York City is complicated, influenced by high property values, dense construction, and a challenging legal and claims environment. Rising labor and construction costs also contribute to higher premiums and more severe claims.

Coverage gaps and denied claims, even when policies are applied correctly, can lead to public misunderstandings about insurance. As Allstate CEO Tom Wilson recently noted, trust between consumers and companies is at a “tipping point” and must be reinforced through reliability and clear communication.

With its independent insight, Triple-I gave policymakers a clear understanding of the potential insurance consequences of expanding short-term rentals in residential buildings, helping them make informed decisions that balance affordability, consumer protection, and risk management.

Learn More:

Triple-I Testifies on New York Insurance Affordability

IRC: Homeowners’ Insurance Rate Filing Growing Less Efficient

Allstate, Aspen Initiative Seeks to Ease Trust Gap

IoT Solutions Offer Homeowners, Insurers Value — But How Much?

Disasters, Litigation Reshape Homeowners’ Insurance Affordability

JIF 2025: U.S. Policy Changes and Uncertainty Imperil Insurance Affordability

Insurance Affordability, Availability Demand Collaboration, Innovation

Tariff Uncertainty May Strain Insurance Markets, Challenge Affordability

Affordability, Insurers and the Economy, Market Conditions

Triple-I Testifies on
New York Insurance Affordability

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By Jeff Dunsavage, Senior Research Analyst, Triple-I

New Yorkers – like residents of all U.S. states – have been struggling with rising costs in recent years, including the cost of home and auto insurance coverage. This week, Patrick Schmid, Triple-I’s chief insurance officer, testified to New York lawmakers about why homeowners’ insurance premiums are rising and where New York policyholders stand relative to other states.

“New York’s homeowners’ insurance market is, in fact, functioning well and remains affordable when properly contextualized,” Schmid said in written testimony to the New York Senate Committees on Investigations and Government Operations, Insurance, and Housing, Construction, and Community Development. “While premiums may appear high in absolute dollars, they are relatively average and reasonable as a percentage of household income.”

Citing data from the Insurance Research Council (IRC), Schmid said New York ranks 29th in its homeowners’ affordability study, with a 2.11 percent ratio of homeowners’ insurance expenditure to median household income ratio. This is a lower percentage than a decade earlier for the state. According to IRC – like Triple-I, an affiliate of The Institutes – New York’s homeowners’ insurance expenditures equal 0.39 percent of median home value.

“When a home costs $413,588 and insurance costs $1,602 annually (0.39% of the home’s value), the insurance premium is not necessarily the driver of unaffordability within the region,” Schmid said. “The underlying property cost, and associated replacement costs, are likely a key challenge.”

He compared New York with:

  • Louisiana, with a ratio of 1.18 percent (more than three times New York’s)
  • Mississippi, at 1.04 percent (nearly three times New York)
  • Alabama, at 0.78 percent (twice New York)
  • Florida, at 0.4 percent (1.7 times New York)

“Only 20 states have more efficient insurance costs relative to home values,” Schmid said. “This contradicts the narrative of an affordability crisis in New York’s homeowners insurance market. Our market is delivering coverage at rates that are among the most competitive in the nation when measured against the value of assets being protected.”

New Yorkers face significant cost burdens that are structural and related to a variety of factors outside of insurance, Schmid said.

The fundamental driver of insurance costs is the cost to rebuild homes, most notably:

  • Labor costs: Skilled trades in NY metro areas command premium wages;
  • Material costs: Transportation, storage, and compliance add to expenses;
  • Building codes: Stricter standards increase rebuilding costs but improve long-term resilience and reduce future losses; and
  • Land values: Property values include expensive land that doesn’t require insurance, making the actual structure component even more valuable proportionally.

Schmid cautioned against lawmakers following the temptation to intervene in insurance markets – as some states have attempted to do in recent years — emphasizing that “targeting insurance premiums would address a symptom rather than the cause, potentially destabilizing a well-functioning, competitive market without improving overall housing affordability for New York residents.”

Learn More:

Triple-I Brief Explains Benefits of Risk-Based Pricing of Insurance

Calls for Insurance-Price Legislation Would Hurt Policyholders, Not Help

Illinois Lawmakers Reject Risk-Based Pricing Challenge

Calif. Risk/Regulatory Environment Highlights Role of Risk-Based PricingIllinois Bill Highlights Need for Education on Risk-Based Pricing of Insurance Coverage

Catastrophes, Disaster Preparedness, Disaster Resilience, Insurers and the Economy

End of Federal Shutdown Revives NFIP — For Now

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By Lewis Nibbelin, Research Writer, Triple-I 

With last week’s end of the longest U.S. government shutdown in history, Congress reauthorized FEMA’s National Flood Insurance Program (NFIP).  

During the shutdown, the NFIP continued to pay claims using available funds, but it could not sell or renew policies until reauthorized. These restrictions affected an estimated 1,300 property sales each day, as prospective property owners must purchase flood coverage in Special Flood Hazard Areas (SFHA), where private flood options – despite gaining traction – are still limited. 

With millions of homeowners and countless communities relying on the NFIP, many organizations across the risk and insurance industry sent a letter urging congressional leaders to reauthorize NFIP ahead of its expiration, writing that a lapse “could further impact affordable housing, create additional challenges for small businesses, unnecessarily further increase the cost of homeownership, and must be avoided.” 

While reauthorization allows NFIP insurers to retroactively issue policies for applications received during the shutdown, the measure extends their authority only through Jan. 30, 2026, leaving the program’s fate an open question. Absent a long-term NFIP authorization bill, Congress has now reauthorized the program 34 times since fiscal year 2017. 

Incentivizing risk reduction 

Flood risk was long considered untouchable by private insurers, which is a large part of the reason NFIP exists. While private participation in the flood market has grown in recent years, NFIP remains a critical source of protection for this growing and underinsured peril. 

Beyond providing economic protection for policyholders, the NFIP also plays a critical role in promoting climate resilience, particularly through its Community Rating System (CRS). A voluntary program, the CRS rewards homeowners with premium discounts when their communities invest in floodplain management practices that exceed the NFIP’s minimum standards, with the program’s highest rating qualifying residents for a 45 percent premium reduction. 

After the cancellation of other FEMA-managed initiatives like BRIC, the CRS can help provide relief where still needed. For instance, Jefferson Parish homeowners displaced following Hurricane Ida in 2021 had secured BRIC grants to elevate and reconstruct their homes shortly before the program ended, leaving these projects in limbo. But the CRS now offers residents and businesses more than $12 million in flood insurance savings annually after the parish secured a Class 3 rating – the first of its kind in Louisiana. 

By incentivizing improved building codes, citizen awareness campaigns, and other resilience solutions, the CRS can ensure that vulnerable communities “will continue to benefit from a comprehensive floodplain management and mitigation plan that helps make us more resilient in the face of disasters,” said Jefferson Parish President Cynthia Lee Sheng in a statement. Notably, however, the parish earned its rating mere weeks ahead of the NFIP lapse, which delayed the discounts from appearing in new and renewed policies. 

As climate and weather-related events become increasingly frequent and severe, the success of these investments will depend on proactive strategies informed by timely, granular data. Though NOAA announced it would cease tracking the country’s costliest disasters earlier this year, nonprofit Climate Central aims to fill the gap by rebuilding NOAA’s database and expanding it to track smaller catastrophes, providing insurers and other stakeholders more reliable information to understand individual disasters. 

Taken together, such efforts can help insurers accurately reflect rising risks in insurance pricing while engaging with communities and businesses in solutions to keep coverage accessible. Sustaining this balance involves continuous collaboration between public and private sectors. 

Learn More: 

JIF 2025: Federal Cuts Imperil Resilience Efforts 

Some Weather Service Jobs Being Restored; BRIC Still Being Litigated 

Louisiana Senator Seeks Resumption of Resilience Investment Program 

Nonprofit to Rescue NOAA Billion-Dollar Dataset 

BRIC Funding Loss Underscores Need for Collective Action on Climate Resilience 

Hurricane Helene Highlights Inland Flood Protection Gap 

Executive Exchange: Using Advanced Tools to Drill Into Flood Risk 

Accurately Writing Flood Coverage Hinges on Diverse Data Sources 

Lee County, Fla., Towns Could Lose NFIP Flood Insurance Discounts 

Coastal New Jersey Town Regains Class 3 NFIP Rating