Transcripts For CSPAN Policy 20240703

Upon buying is a act of optimism. It is also stressful. Families buying a new home have so much to think about, making sure they are covering their down payments, moving in, getting kids set up in a new school if they have children. Homeowners are confident that their monthly Insurance Premiums will provide a backstop against the physical and natural other dangers or incidents or accidents noting their coverage can help homeowners speak better at night. Or that is how it is supposed to work. Owners have faced a surprise when it is time to renew. Homeowners have spent time years making their payments without fail are shocked to find their insurance or too many cases will not renew their policies at all. Entire markets leaving consumers with few options that cost more. Consumers are counting on their insurance now more than ever. Since the beginning of the year to country has experienced 15 weather disasters, each resulting lay losses of more than 1 million. 15 million 15 weather disasters costume more than 1 million. Severe storms resulted in 34 dollars of insured losses of the first half of this year alone, the highest ever in a sixmonth period. Hawaii, florida, vermont, extreme weather events that uprooted americans lives. Losses from hurricane idahlia reached 20 billion. A letter detailing the loss vermont has suffered from devastating floods this summer. So often it is the lowest income residents we know that in disaster after disaster. It is the lowest income who have been pushed into the areas whose weather patterns continue to change. This is not just on the coast. Head of the association for property insurance says there is no place to hide from the severe natural disasters. The result has been a abrupt trend. Companies arent restricting coverage and raising rates or deductibles in some cases. As secretary yellen recently noted the protection gap increasing costs limiting options for families increasing Financial Stability concerns are cross financial system. U. S. Reinsurance rates, the cost of insurance that Insurance Companies buy to protect themselves from spreading out risks have reportedly increased 50 . These jumps in Insurance Premiums have been driven in part of severe or natural disasters for themselves. Higher reinsurance rates means higher insurance costs for Insurance Companies which means price hikes to consumers which will have millions of americans paying more for Home Insurance. While others scramble to find any insurance at all because the insurance is refusing to renew their apologist policy. Not to be outdone in florida since 2020, 16 severe storms and hurricanes have caused more than 100 billion dollars worth of damage and led to ax abyss of insurers. Farmers insurance became the fourth in florida to exit the market, joining bankers insurance, lexington insurance what an ounce in july would stop outright property insurance in that state. Days later, aaa announced that it will not renew high exposure policies in the state despite the fact that every yearly Homeowner Insurance premium costs 6,000, the highest in the country. 14 insurance countries reentered the receivership process. Insurers left homeowners and businesses left no choice to receive statemandated with typically higher rates. Insurers are the last resort appeared these insurers had a small share of policy, but climate exposures increased everywhere had been battered. In florida, floridas citizens, the states insurer last resort is now the states single largest property insurer feared californias insurer insurer. Reportedly offering coverage to hundred thousand policies at the end of last year. It is not only homeowners hit, sure can coverage the National Multifamily counsel report similar issues for multi family sectors, higher rates and deductibles, coverage limitations, private market insurance at all. Because the insurance contract is between the Property Owner and the insurer, apartment owners say they are seeing a clear trend. Renters will only bear the burden as higher insurance costs are passed on to them. Todays witnesses understand the challenges facing homeowners and Property Managers for seeing the problem of rising insurance costs across many states. I am pleased to have all three of you here today to explore these important topics. Welcome. Thank you all for joining us today with such a important conversation about the state up insurance and throughout the country. The Important Role that insurance plays and the ability for homeowners as we discussed today to transfer the risk to a Insurance Company. As you would imagine, coming from South Carolina thinking about my friends in florida, georgia, North Carolina, thinking about the devastation of buyers in maui, my players prayers and thoughts are certainly with those who folks who have lost family members who have seen their properties destroyed. So much attention is given to the challenges of the environment, climate. Too often what we see whether in maui or other states, the manmade disaster that jeopardizes insurances of those states. I think about the fact that in my lifetime as a adult, i spent 20 plus years in the Property Casualty insurance business. I do have a infinity for the terms that we use while in business. Mike, have you ever been in insurance . One of the things that we both talk about is of pml, probable maximum loss. Can a Insurance Companies calculate accurately or even in the range of reality within the possible maximum loss within the market. Whether the market is a charleston area or the state of california, ohio or other natural disasters. Can a company predict the loss that will be occurred based on the premiums they charged per policy. When you cannot, you do not stay in the market. It is kind of that simple. Insurance companies have to follow the basic rules of economics like any other business. That is one of the challenges that we see, particularly in states like california and florida. California overregulated market makes it difficult for Insurance Companies to make a profit in those states. When you cannot make a profit, you do not stay in the states. One of the reasons you see Insurance Companies that were just named leaving markets because the efficiency is impossible to get there. The inability to find a path forward to provide some reduction of that risk. Or as i discussed before, the necessity of us to get our arms around the catastrophic occurrences from coasttocoast. Whether it is a hurricane, earthquake, flood, tornadoes. We have not really rustled with wrestled with the actual damages done by catastrophic occurrences across the country. On the coast or frankly if youre in the south, whether it is louisiana, florida, South Carolina, we account for all half of the premiums. If a flood happens in new jersey , ohio, policyholders there never heard of a Flood Insurance policy. They are drawing money out of a account without even putting resources out of the account. We have some real challenges that we should appreciate that every Insurance Company is wrestling with today. You think of a state like california and florida, one state you have a burdensome marketplace that is impressive. It is not just Insurance Companies that are fleeing states. Every other business can find another way to go seems to be looking for another market. The challenge that we see in florida, Regulatory Environment is challenging. The natural disasters are challenging. With only 9 of the policies, homeowner policies in the country they represent about 79 of Homeowner Insurance lawsuits. Over the last decade, companies in florida paid out 51 billion. However, 71 of that goes to attorney fees. Something is broken in the market where it is not the homeowner that is receiving the resources, it is the lawyers because of the challenges in a broken state as it relates to the environment that is apparent obvious and clear. Whether it is california or florida, we need to understand the challenges that these Insurance Companies face and why they continue to pull out the market. I would love to hear from the experts today, solutions. For us to have a panoramic view of how to keep Insurance Companies viable in those markets because homeowners today are desperately looking for opportunities to afford the coverage. I think the average of the chairman suggested earlier the average premium for a house 1700 of our homeowners for the same policy in florida it is 6,000. That is the case. It is not simply the case of rates efficiency based on sufficiency based on the probable loss of a natural disaster, it has to do with the 51 billion dollars paid to attorneys that have to be factored into that new definition. Sen brown i will introduce todays witnesses. Federal Advisory Committee insurance and member of the automobile Advisory Board term member the coalition against insurance fraud. Michelle noris at the National Church residences, the nations largest provider of senior housing. She serves as chair and board director. The director of the finance insurance policy program institute. He served as a director of Insurance Research in multiple roles. Please begin. Good morning, mr. Chairman. I am doug heller. There are several forces creating the property insurance crisis that has arrived in parts of the country and brewing in others. I will highlight what consumers are dealing with, the underlined crisis of the crisis and thoughts on how government and insurers can Work Together to build safer homes in more resilient communities appeared in 2022 american spends 125 billion in insurance, rising 40 faster since 2017. We hear many paying upwards of 500 a month just for the basic Home Insurance. Not surprisingly, regions exposed to the climate risk have been hit hard in the market. This is a national problem. Some of the highest Home Insurance prices are paid by residents of the midwest facing tornado and hail risk. The pain is not equally distributed. The neighborhood most vulnerable are often too communities of color or low income amplifying the crisis for the. It is not just geography targeting these communities. In all but a few states, insurers penalized homeowners if they do not have a great credit store even credit score, even if they did not file a claim adding more pressure on the premiums. The Insurance Company deciding to walk away from long served communities in some states entirely. Everyone in the mortgage is required to maintain coverage because people want protection for their most valuable asset, this is a scary situation. What makes people so angry, the insurers for years, who presumed experts on the risks, they told him that the neighborhoods are fine and insurable. For companies to take the chips off the table without warning and walk away is unacceptable, especially after the industry as a stick calls for climate risk analysis for years as the industry resisted calls for climate risk analysis for years. Or when people cant make their payments they end up being forced placed into expense coverage by the Mortgage Company. We are hearing more and more, people cannot afford to on a home because they cant get insurance. The third problem is the hollowing out of the coverage that people can afford. Rather than working with policyholders to reduce the risk, insurers are selling policies with more exclusions and higher deductibles. Companies are reducing their own risk for sure. It just transfers it back to homeowners, renters and other consumers. Why is this happening . The reality of worsening disasters is undeniable. Tackling requires a collaborative effort to reduce the risk that extends from Climate Change and more well defended and resilient communities. Better data collection, more grants for individual homeowners and building owners to their homes. When Property Owners invest in loss mitigation, they should be promised access to coverage and released on their premiums. This discussion must include property development, equity as we try to adapt to climate risk. If we do not take on larger questions, Insurance Companies will be the ones left in charge of policies through their ratemaking. The exploding crisis in the unregulated reInsurance Market. Property Insurance Company used to hedge their bets. Prices are up 35 since january alone if insurers can get the reinsurance that they seek. We need a meaningful Public Partnership to address this massive failure. Just as we did with terrorism. In exchange for insurers offering one without gaping holes. In capping, insurers cap and. To conclude, by prioritizing their own exposure to Climate Change rather than reducing the actual risk of loss, insurers have left american insurers in a bind that called us to the hearing today. Demand holistic approach to demand and. Reduce the damage done by Climate Change, strengthen the community and use innovative partnerships to yield affordable and property coverage to americans as we confront Climate Change together. If we have questions, i would love to talk about senator scotts concerns about what is happening in florida. I would thank the committee for having me here and conclude their. Mr. Chairman and committee members, i would like to thank you for this opportunity to speak about the opportunities in the property Insurance Markets and how this is impacting the multifamily sector, especially Affordable Housing. For over 60 years, housing and health care to older adults. We currently provide affordable rental homes for more than 20,000 low income seniors in 23 states. My remarks largely today reflect those of a growing coalition of multifamily housing stakeholders. Concerned by the trends in the Insurance Industry and the impact they have on the Affordable Housing and the people who live in those homes, i am proud to be associated with several of those organizations as you currently mentioned including Affordable Housing for the future where i am serving as chair. The National Family housing council, where we are a member appeared in these groups along with many other hausa trading associations recently created a task force focusing to the entrance market challenges Insurance Market challenges. In a slit this lens, i would like to share we know about the it is with this lens, i would like to share we know about the housing supply inaffordability. Property insurance rates have increased for 22 consecutive quarters. In just past three years Housing Providers have reported premium increases ranging from 30 to 100 for affordable rental housing. The National Church residences, we have seen our property and Casualty Insurance costs go 400 increase in six years. We are also seeing reduced coverage. Minimum deductibles on the property level policies have increased from 10,000 to 25000 and up to 100,000, which is the option we had to take this year. In addition to the risk increased, these high deductibles can conflict with the financial requirements. To avoid defaulting on financing , Housing Providers have to take additional policies, create layered coverages, all of which add costs. Even owners with very large portfolios like ours have little Bargaining Power in todays industry. The pressure created by these increases in fact our residents. Increase insurance costs results in increased rents in market rate housing and Affordable Housing communities. Continued rising cost may lead to reduction in services to our residents and threats to longterm sustainability of our community. High insurance costs are also hindering solutions to. The Affordable Housing crisis rising insurance costs means lower income to support debt or equity returns. If you cannot borrow as much or attract less investment, it becomes more difficult to finance the construction and preservation of the current Affordable Housing communities. We are seeing the volatility of Insurance Market being driven by three key issues. The unprecedented frequency of National Disasters. The impact of inflation on the replacement value methodology. Finally, on the Insurance Market, capacity and policy limitations. Many insurers have fees to underwrite multifamily casualty policies nationwide or insert markets prompted National Disasters like the gulf coast state like florida and louisiana. My message is this. We must act now. Our country has a shortage now of 7. 3 million Homes Affordable to low income people. We cannot afford to jeopardize existing rental housing or slow the creation of new ones. Both shortterm and longterm policies solutions are needed. In the shortterm, hud and other federal agencies can provide funding for affordable rental homes. They must rethink existing insurance requirements and provide increase ability and funding to Property Owners to account for the realworld challenges we are facing. In the longterm, investments in Climate Resilience and the greater level of intervention by the federal government in the Insurance Market are necessary given the current market failures. Thank you for the opportunity to speak today and for your efforts to explore and address these significant insurance challenges. We stand ready to work with you to further these efforts. Thank you. Chairman brown, members of the committee, thank you for holding todays hearing and for the invitation to testify. Todays hearing is timely, consumers and state sailing Insurance Market struggled to ensure Homeowners Insurance within budget. Availability and affordability concerns are acute in california and florida. Symptoms of the element include insurance in solvency, insurers ceasing to do business are pausing to business. Large natural disasters. At first and foremost, it is a miracle that no lives were lost from hillary or idahlia. California and floridas Insurance Markets are not all gloom and doom. Lets check the temperature of the broader market. Some maintain that the Insurance Industry capital has been depleted, that is not so. The primary Insurance Industry had a slight underwriting loss for every one dollar in premium that its in, it paid out a dollar two cents and seven mills in losses and expenses. Investment income offset contravening to a 4 contributing to a 4 return. Competition does a much more effective job that government of protecting insurance. The Insurance Industry is highly competitive. Chairman brown, Ranking Members scott, ohio and South Carolina our the most competitive states, especially South Carolina is number four. Someone is doing something right. States residual markets are another window into insurance competitiveness. Residual markets are statemandated insurers of last resort when insurance is unavailable in the standard market. California has and floridas are unhealthy symptoms. Insurance markets and loss exposures vary across states. Maine is the least catastrophe prone, whereas california is exposed to earthquake, wildfire, even typhoons. One would expect Insurance Premiums to be higher than in less catastrophe prone states, but they are not Homeowners Insurance and premiums in tennessee and south dakota are equivalent to californias, even though californias risk and a building a repair cost are higher. Carrier formulas californias goes back to 103, proposition one a. Made california the only state to introduce public interveners who could challenge rate increased to about 7 this requires regulators to address rate change within 60 days. In reality, the 60 day rule must be waived resulting in delays in in year or much more. This prevents insurers for charging riskadjusted rates. The result is close to 20 insurers pausing business. Proposition 103 is a form of price control. Price controls do not work. California demonstrates this. More ways californias regulators handicaps insurers is by prohibiting insurers and recent climate patterns into risk modeling. This is like prohibiting the donut maker of changing the price of its donuts. In contrast markets floridas market troubles were given by excessive litigation. For years florida had a dubious distinction of being home to 79 of the Homeowner Insurance litigation in the country despite having only 9 of the country Homeowner Insurance policies. What is the good news . The California Senate held productive and bipartisan information hearings on climate models. In florida, comprehensive reform was signed into law. Several new companies with fresh capitals have announced entering florida, one just yesterday. Going forward, californias telling whims of change should continue. Florida should maintain its resolve and put in of lawsuit amused in the rearview mirror. Thank you for your consideration of my views. I look forward to your questions. Sen. Scott mr. Heller, you cannot open a newspaper without seeing stories of homeowners facing skyrocketing insurance rates with less coverage higher deductible while not being able to find insurance despite what some say it is not happening in california. Why are so many people across the country suddenly being priced out of the homeowners Insurance Market . There are a few reasons. Climate change is severely exacerbating the cost of Risk Transfer. Increasing the severity of increasing disasters. 15 1 billion events this year alone. The most severe incidents were in texas. This is happening around the country. Climate change is a National Concern and it is effecting Insurance Markets everywhere. The unregulated global reInsurance Market is number two and a driver here. The increase premiums over the last two years put the rate online index produced by at the highest in history of the index which have been calculated since 1990. That Risk Transfer is also expensive. There has been an adequate oversight of state insurance around the country and terrible rules that require some of the big public insurance to charge customers more than the actually indicated rate. Where we making last minute insurers charge more. It is a of these difficult issues. Sen. Scott i hope we can get agreement at least acknowledgment from everyone in this committee of Climate Change and the severity and the huge costs. We heard arguments that consumer rejections lead insurers to stop writing, insurance policies in certain states. The oversight that home owners insurance would appear how is the coverage multi family policies different from the coverage a homeowner would buy . Are you seeing if insurers offering multi family coverage across the country . Sen norris yes. I would like to highlight what was already mentioned about the impact of Climate Change. The twoyear point. The three largest claims have happened in the last three years. One was from hurricane ida. Six in half Million Dollars for our organization. Hurricane ian, which hit a single property in florida and required us to vacate the property for six months and rebuild it for 13 million. Four storm delegate, which hit 44 of our communities winter storm elliott, which hit 44 of our communities. We see in the Insurance Market, our insurance is covered at a national level. We are in fact seeing fewer options available for us. In our previous renewal, we had four carriers that worked with us on our Property Casualty. Three of those walked away and left us with a single carrier. Basically a take it or leave it on the premium. Sen. Scott i wanted to thank you for the concerns around nonprofits having difficulty finding affordable property Insurance Coverage. I appreciate that in your testimony. You noted that raising insurance rates, reducing coverage do not reduce risks, it reduces risks for the insurer who shifted it onto the homeowner. What can we do to reduce risks to bring prices down for homeowners . Several things. We are doing a lot of this work with the building resilient infrastructure the Brick Program at fema there were some new data released about where we need to invest to provide the most return on those infrastructures around 500 different census tracts in the country. We need to take the front end of the solution. We historically taken the back and by having fema emergency funds after disaster. We need to be putting our money up front. Grants for homeowners tax free. That is something we can easily do. I know with california earthquake the Earthquake Authority wants to be given money out for people to strengthen their homes. We need to make those investments on the front end. If we protect, with a dollar we do not need to rebuild with emergency funds after the fact. Sen. Scott thank you, my time has expired. We know it can be difficult for nonprofit operators to access resources for medication for ways we can mitigation for ways we can effectively Work Together. You suck something earlier i wanted to make sure. If a you said something earli wanted to make sure. If a Company Brings in a dollar that is probably a bad thing. That is right. The only way you make that up as rely on your investment between the time you bring it anytime you pay it. In a good market will have enough to stay afloat. If you do not have that good market like in todays market, companies and business, gas and all of the suppliers it makes it more difficult to get that kind of roi. That is right. The contribution from Investment Income was depressed and did not contribute enough to bring the combined ratio below 1 . Sen. Scott we heard about rebuilding national Flood Insurance program. 1 of losses that occurred are repetitive losses account for about 30 of the payouts of the national Flood Insurance program. If you keep building in the same area whether there is a disaster after disaster, the chances are pretty good you will pay more out. Sen. Theodorou that is right. There needs to be incentives for better behavior of the national Flood Insurance program. They are trying to diss incentivize these properties by having a term of 5 increase if you have these repeated 25 increase if you have these repeated. By increasing resiliency. Perhaps sometimes the federal government isnt really the answer to a local communities need to do in making decisions whether or not to rebuild their property in a place where it has had multiple losses to the same property based on the same basic set of circumstances that come through a community. Sen. Theodorou the federal government hasnt had a good history of involvement in insurance. The national Flood Insurance program, which has led billions. The subsidies that dont encourage farming of the riep crops in certain areas. The insurance is tremendously complex. There is administration and distribution and a dozen other functions that the federal government has no business in trying to create Insurance Companies. It is simply not feasible. Sen. Scott perhaps one of the reasons we should thank the act of 1945 that made our form of insurance a statebased system of insurance, the structure has produced highly competitive, fair markets all across the country and set us at a global standard. Is that a accurate statement . Sen. Theodorou that is right. In the past to create a backstop or provide insurance have not been successful because it is not feasible. In 2007 a couple of years after Hurricane Katrina, chris dodd held a similar hearing. Chairman of the economic cea talked about the ways in which that would not be feasible by charlie crist, governor in florida. There was a Kevin Mahoney build. A number of bills have been introduced. It does not have a history of working then and it will not have one now. Sen. Scott sounds like to me you answered my first question, which is the fact that federal taxpayers subsidizing state insurance challengings challenges is not a recipe for longterm success. Sen. Theodorou subsidies and cross subsidies were the poorest subsidized. Simple. Sen. Scott could you speak to why the Insurance Markets operate at a lag behind the rest of the economy and why we are seeing increased prices . One of the questions im trying to narrow in on is over the last couple of years we have seen a inflationary impact that led to increases. The new market you have 5. 2 rates are higher. That cost something. Sen. Theodorou it does take a couple of years before interns in. Building materials rose by 19 . Copper prices, other prices of lumber and needed in rebuilding homes have gone up. It takes time because the loss may happen toward the end of the policy. For the repairs, they are more expensive than before. It takes one or two years before those inflationary impacts are fit in. There are three main drivers. Economic inflation, reinsurance costs and natural catastrophes. Im glad that you brought up the inflationary pressure. Mr. Haller if congress does not act by september 30, the national Flood Insurance program does not exist. Can you tell us the concept of what that would be . Mr. Heller americans right now are facing these unprecedented catastrophes. We just saw pennsylvania and new york, vermont hit by severe flooding. We need to have a Flood Insurance. The private market has not been there to provide insurance for homeowners. It has been stripped out of the homeowners policy. We need a backstop so there is Flood Insurance. Only 12 of americans actually buy Flood Insurance. We are desperately underinsured for this coverage. I think it is important to note that, senator scott. Is right. The Flood Insurance program has not been a success we needed. If we do not have it, we got nothing. One of the reasons we need a federal reinsurance would be so valuable like we did with katrina when we had this desperate exposure, bring in a federal reinsurance, we could push the Flood Insurance product back into the state, back into the private market. Which i think senator scott was calling for. Then the private insurers could be protected when they sell Flood Insurance knowing that the worst Case Scenario was taken off. Until we push Flood Insurance out of the federal government and back into the homeowners policy that we all buy, we need to have a Flood Insurance program in the federal program. Sen. Scott theres also another approach, which would be litigation. Sen. Brown we are actually buying homes in areas that are flood prone. A natural dissipation of floodwaters. My conclusion is, we probably should do a lot more creating instant work with respect to resilience. Mr. Heller that is our first, second and third thing we should be doing is reducing the risk. We got the knowledge and data whether it is with floods. We know how important better roofing is. This stuff can be done but we have to make a commitment to it rather than shifting the decks on the titanic while saying Insurance Companies are not going to take that risk, higher deductibles, less coverage. Property owners take the risk instead. Sen. Brown in rhode island our assembly passed a law that requires notification for the Insurance Company to write a note for their departure. Is that a approach that is worth emulating elsewhere . Mr. Heller i think that is exactly right. We hear from homeowners all the time. Why am i suddenly being told i cant be insured . They always ensured me. We need to have a transition process. Insurance Companies Take our money and we say, now we realize it is Climate Change and we are out of here. It is really important. Thank you, mr. Chairman. Thank you to all of you for coming us today. I am curious. How long have you studied or participated in the Insurance Market reviews . Sen. Theodorou i have been analyst of the Property Casualty Insurance Company for 15 years, 12 years in connin andg for the last three years leaving the Insurance Research. I was in the industry. I worked in the industry as a underwriter and other capacities. Sen. Brown i was first licensed in the insurance to sell insurance as a agent in south dakota in 1978 for Homeowners Insurance. I cared the license although it up to 2015 when i was elected in the United States senate carried the license all the way up to play 15 when i was elected in the United States senate. There was a old ho to form transformed into a ho three form. You have a risk coverage with exceptions built in. I was trying to think back, i do not believe i ever seen a homeowners policy which was available with a Flood Insurance as part of the original perils. Are you aware of homeowners policy that started out on the basic forms with Flood Insurance . Sen. Theodorou malcolm a flood has been excluded for several decades prior to the 1970s no, flood has been excluded for several decades prior to the 1970s. The national Flood Insurance program has been the principal provider of Flood Insurance. The good news is, the private market is growing. Now, there is 77 private companies that are writing 31 of Flood Insurance business compared to 12. 6 percent a few years ago. The private market is starting to come in, especially since the new racing methodology rating methodology has been introduced. I have personally, i think it is important we get it renewed. The vast majority of americans basically look at their policy and they say i do not need Flood Insurance because i am not in a area which is flown prone to flood, so they do not mortgage does not regard them to buy it. What you end up with, folks who would buy, people have a loss or be required. Sen. Theodorou that leads to two problems. Adverse elections, the policies that are written are the ones with the perceived highest risk, next to a river or creek or on the coast. You have low penetration, 70 million homes in the United States. Only 5 million carry Flood Insurance. Only 80 of homes are exposed to floods as we seen in the last couple of years we have these atmospheric rivers, rain storms that are horrific and violent that are removed from bodies of water. The flood exposure is there. The market is underpenetrated. We represented thousands of Insurance Companies in the agencies that i had eight ownership in had a ownership in south dakota. They either wanted to be in the market, they did not want to write one or two, they wanted to write a lot. The vast majority of insurance carriers would love to write for a particular coverage if they thought they could make a coverage. Sen. Theodorou the exodus from california as Ranking Member scott said, economic spirit if youre losing money. If we recognize there are certain areas around the country where carrier simply said, we cannot make a profit, we are on our way out. Mitigating circumstances, Climate Change is a part of it, being able to increase your rate of some of those Severe Weather events. If there are not able to increase rates based upon that, we cant make a profit. There seems to be a movement out there where people think we should spread that out to taxpayers to pick up those losses and keep the rates low. Is that a Fair Assessment of what some folks think is a better alternative . Sen. Theodorou it will allow people who have higher risk to go without having higher risk. What happens when the private market makes a amount for insurance that is almost unfeasible to be able for the homeowner to afford, but choose not to have property flooding insurance and the consequences of that when we have the storms in the wild flyers or the flooding that ends up or the wildfires or the flooding. Is it better to have the system . Sen. Theodorou the affordability issue could be dealt with testing. If there is real affordability and the home cannot be moved, there can be some kinds of means testing. The good news, with the new rate methodology, 20 of policies have seen a decrease in the premiums that they have. Let me just ask this. Decades of inaction on Climate Change is causing the property of Casualty Insurance market to buckle under to provide returns for sale and sell a product that policyholders can afford. As policymakers, we have a obligation to create market failures when there is a compelling reason to do so. It is to ensure families can afford necessary coverage and prevent collapses in our local housing markets. Week between wildfires, floodings, between wildfires, floodings, droughts. What would it mean by the way, those communities are not wealthy. What would it mean for cost for seniors if homeowners in terms of Flood Insurance becomes unavailable and Flood Insurance it becomes prohibitively expensive . Sen norris i assume youre talking in our multifamily communities, Affordable Housing communities that we have in your state . Correct . In new jersey along with all of our communities in other states where we provide Affordable Housing, the idea of us as the owner being able to not be insured puts a tremendous risk not only on us but our residents as well. At some point, if we were not able to get insurance, it would leave our building and residents completely exposed. We have, as i mentioned earlier, we have our highest three claims have happened within the last two years. If we did not have insurance, those apartments would be unable to be occupied. At one of our communities they were out for six months. They would have been just left to find their own homes. It is Senior Communities like the ones youre talking about is a part of the reason i introduced this bipartisan and react the legislation would ensure flood rates would stay affordable to tackle longterm challenges of flooding. 11 years ago we in new jersey faced the worst mass shooting disaster, superstorm sandy. In the months and years following the disaster, these are people who never made a claim and all of a sudden now when they are making the claim, to the manipulation of engineering reports and utilizing loopholes Insurance Companies acting as contractors for fema lowballed policy holders. It seems to me that a old dog does not seem to learn new tricks. What are you seeing in 44 Homeowners Insurance policyholders in the aftermath of ian . It has been terrible for homeowners after ian. This is just a straight fraud or from Insurance Companies. We need to prosecute those Insurance Companies that are teaching people. How regulators are not coming in realtime and taking the. Leaving homeowners exposed after taking the premiums. When they meet the companys most, the companies turn their backs on them or even sheets them. What took place in sandy so it does not happen in the nation. Does the nfip have a. We seen a sort of to point out with these massive rate increases for a lot of people. We need to be making sure that the rates that come out of are fair and distributed fairly. We have not seen we have seen real problems at the nfip. We lost 150 thousand policyholders and by their own admission, it will lose one million i the end of the decade due to premium income is. Senator tolman from North Carolina. Thank you, mr. Chairman. Nana must commit unanimous consent to submit these documents. One was coauthored by mr. Theodore. I want to go back to a very important number that centers not touched on. For every dollar of premium taken in, you have paid out 1. 02. Is that right . Yes. So for every premium, they were off by two cents, right . Yes. Hopefully they have a strategy to make up those losses. Would it be fair for anyone to say that the insurers who are paying out more than they are taking in our treaty . Based on the data . The data says they are not greedy. Longterm, the Insurance Industry is going to has a return of 6. 5 . Companies that are publicly traded have around 14 to 15 . So the Insurance Industry has a smaller margin than other industries. So a part of this is we could reassure National Policies that exist as past policies. Things like california. You mention prop 103. They are addressing some problems in florida through four we did this 10 years ago in North Carolina. I am glad they got on board. There seems to be ace and that we do not have enough regulations in place at the state or federal level to fix this problem. Do you think there are clearing gaps and additional regulatory measures we should take to fix this problem . No. I think the push to establish or introduce a federal backstop or support, however wellintentioned, would backfire. Contrary to popular opinion, the Insurance Market and primary Insurance Market is not on its knees or collapsing. It is in the business of dealing with catastrophes. In our cycles in the business and factors beyond its control. In the mutual Insurance Industry, there are companies who have been doing this is for 200 years. So they are doing something right and have been through this before. Do you think there are many Corporate Board rooms that have a strategy for shrinking their staff for their Growth Strategy . Only when they only in states where they can make one dollar. In florida, they cannot make the numbers work or sustain it and we know why. So what we should extend here is examine the policies that see policy decisions made at the state level that is creating these problems at the markets. I dont know how we actually address you listed off three key areas that need to be addressed. We need to address all of them. I dont think we have accomplished that through some centralized, more burdensome regulatory construct from washington. I think there is a way to fix this problem and i do not think it is a big federal solution. I think it is working through root causes. You can draw a nexus between policy decisions made and why you exited the market. I like what you said about affordability. We do have people seeking assurance that seeking insurance that would prefer not to be on the property anymore. We failed with fema and movements. We have had 53 tropical cyclones impact North Carolina over the last 20 the last 20 years. We average landfall in North Carolina every four years. I have been dealing with this since i have been in office. I do not believe the mindset some of my colleagues have that this can be fixed in washington. It needs to be addressed on a statebystate basis. We need to address these problems but it will not come from compelling a private sector business to serve a market that cannot be set aimed with the strength they have on the risk. I have one final question. I would like to just confirm what you said, mr. Heller. You said credits alone could increase a premium by as much as 80 . Heller yes, we have seen premiums actually jump for people with no personal Credit History by as much as 100 . Sometimes doubling their premium just because. Mr. Theodorou, can you explain why this should include a credit risk rating . Theodorou the credit score ensure insurance is found to be correlated with losses. The industry, from what i know and by experience as an underwriter and dozens of overpriced policies because of credit scores. If it did, Competitive Forces would come in. If it was not relatively correlated to the rest, it would be factored into the process . Theodorou yes. s senator of pennsylvania is recognized. Thank you, mr. Chairman. Mr. Heller, can you remind me what happens in pennsylvania when working families cannot get Insurance Coverage . Heller thank you. What happens is people cannot have their home or cannot own their home, or if they are a renter to the a renter of the home, they do not have insurance for their home. For homeowners who cannot make their premiums, they are being forced into a policy by their Mortgage Company where their monthly Mortgage Rate will go up to buy the coverage for the lender but that provides no coverage for them. We see people who cannot afford their coverage paying insurance for the Mortgage Company but they have no protection. One way or another, you are either uninsured and losing your home were forced into coverage that does not protect you, where you do not have coverage as a renter for what you need when disaster strikes. This has a financial downstream that is catastrophic for individual families after, whether a home fire, a flood, or a windstorm. Is there ever a good reason to penalize new building solely based on their zip code . Heller no. This is one problem. The history of redlining in america has been a troubling one and we see this in the homeowners market as we have since the 1930s. We have people who build safe homes in safe buildings, wherever they are, so we should give them the credit. We want to talk about building away from dangerous risk zones due to climate disasters, but when people try to build in certain communities that because of zip codes and redlining cannot get insurance, then we gifted no option for Affordable Housing. It makes no sense to have this on a Home Insurance price. It is devastating. What is the financial benefit of proactive land use in planning . Heller it means lowering the cost of risk which means lowering the cost of insurance. It means a homes, safer communities. Pennsylvania has done a lot of work investing in this. Either we protect homes before disaster strikes or rebuild the taxpayer money afterwards. It means Insurance Companies have less risk to bear which means they can charge lower premiums. I send my balance back to the chair. Thank you, senator federman. Senator rance is recognized from ohio. Thank you. We appreciate your time. Especially, we want to welcome mr. Theodorou, a graduate from my neck of the wins in ohio. I appreciate you being here. I want to focus on the california model and whether there is something fundamentally broken about the way california regulates its Insurance Market. We all agree want people to be able to afford Home Insurance no matter how much money they make. There are two ways to that. One is to help People Insurance in market that is reasonably runs up is reasonably regulated and operates effectively. Another is to regulate the market so it can function properly. They worry california has gone down that pathway where we risk learning of the wrong lesson. I would like to direct my questions first to mr. Theodorou. Thank you for being here. Can you maybe just explain prop 103 and what i teachings about Insurance Regulations in california . Theodorou in 19 88, proposition one of three was passed by a slim margin in california which gave a 20 rebate to automobile insurers and introduced the intervener process, where parties could argue for rate decreases. It established a demo position which indicated the Insurance Department would respond within 60 days. Those are the three main things. And prior approval of rates. And i right that the Regulatory Regime has come out of am i right that the Regulatory Regime that has come out of prop one prop 103 is backwards . As support most as opposed to forward modeling for risk . Theodorou those prevent them from using the recent experience of catastrophe and there is another statute presents us of incorporating reinsurance costs. That is part of the cost of Insurance Companies. So there are two other revisions in the california statute in addition to the prop 103 thank you. Mr. Heller, i want to direct this to you. One thing i have heard is the reason insurance rates are so high in california is because of Climate Change. Places closer to the ocean are theoretically going to be more at risk to climaterelated disasters. My question is, how can we credibly argue that climate risk is what is driving californias Insurance Market when they are more backward looking than forwardlooking . Of course, the risk of Climate Change is in the nature, not the past. Second, you see all types of Casualty Insurance going up. It is one thing when property insurance goes up to climate risk if it is hard for me to swallow the idea Auto Insurance will go up, but that is what we see in california. Heller have been working in the california Insurance Market for years so i appreciate the opportunity. There is some real misinformation because from 2019 to the present, california has been one of the most profitable homeowners Insurance Market is in the nation. It is vastly more profitable than the country as a. When we say companies are leaving, they are not leaving but cutting back on their business. They have done better in california over the last since 2021, they received 95 of the rate increases they requested in the regulatory system. That works but also allows public income which is critical. Is this profitability because they effectively less left the riskiest markers and focused on the less risky . Heller that is because they invested over 2 billion in wildfire prevention and we have done the work in his direction for tumors to ensure prices rested done the work in the direction of consumers to ensure prices were fair. When we talk about reInsurance Market is escalating to the highest point they have been in 30 years, and california does allow insurance. There is no statute to prevent them from buying reassurance. They cannot pass through the excess of what they factually indicated to consumers. It was states that allow them to pass through, like florida, louise deanna, and colorado louisiana, and colorado. This allows Insurance Companies to be free from the exorbitant international unregulated market but does not protect us from droll. From withdrawal. Can you touch on the climate question specifically in regards to auto versus homeowners . Climate doesnt agree on comprehensive policies. I disagree with what you said about climate being a coastal rift with the ratios going through the midwest are linked to Climate Change. It is hitting anywhere so i dont want to mistake this as a coastal issue around the country. Sure, but california is probably more at risk than ohio. That is right. Ohio is a great place. The auto Insurance Market in california is not different from the auto Insurance Markets around the country. Auto insurance in california, because of protections from proposition 103, prevented Insurance Companies from getting a windfall around the country when people were not driving, whereas the rest of the country kept charging like it was 2019. There has been inflationary pressures because of car repair costs that are more driven by postcovid and Climate Change. So we are seeing rate increases in california. As the Washington Post reported, the rate increases are severe. It is not related to the Regulatory Oversight and can protections. Senator warren of massachusetts is recognized. For natural disasters like floods, fires, or storms, but Climate Change means natural disasters are hitting harder and work for only then before harder and more frequently than before. Auto insurers are pushing out of entire cities or states. Without insurance, millions of families will be at greater risk for climate crises and whole communities lose access to insurance. The impact will be felt all the way through our economy. Lets talk about what some of the tools are to make some changes. More than two years ago, President Biden issued an executive order telling the federal insurance office, whose job it is to monitor the insurance agencies and examine the impact of Climate Change on private insurance in the United States. The sio proposed the fio propose things that would help the federal government better understand climate financial risk and to assess the potential for major disruptions to Insurance Coverage across the country. Mr. Heller, with the data that the fio is proposing to collect help identify this risk to consumers and the economy from Climate Change . Would it be full . Heller of course they would. We need to understand the granular data and where the industry is more exposed, where coverage is shrinking and consumers become more exposed, and how risk has transferred over time. Think about growing deductible and pressure on costs. To keep information from getting to the public and public policymakers not just through fio, but for years of leading data but not getting the data. It is one of the reasons marcus talked about this because it is so sudden reasons marcus tal markets talked about this because it is so sudden. I can tell i am talking to another data nerd but we need to understand the risk. Why dont we have this . I has it has been more than two years. It turns out regulators are pushing back on this. They say collecting this information is a necessary and i quote them illadvised and burdensome thing. They claim this threatens existing efforts to mitigate Climate Change on policyholders and even save the sio and even save the fio is strong arming insurers and regulators to adopt Climate Change rest 70s which could lead to higher costs on insurers and higher premiums on americans. It seems today that the insurers and regulators are going out there way to hide information about premiums, claims, and profits. Without that information, consumers have no way of knowing if a hyped premium is just fine or if it is patting their profits. Why are Insurance Companies so hard on providing these data . What are they trying to hide . Heller Insurance Companies do not want public policymakers to really understand where things stand because it allows them to do what we have seen in california which is to try to bully policymakers by saying, we are going to leave if you do not do what we want. The reason fio made the request for data was because there was a black hole where the data needed to be for us to you out for ourselves for us to figure this out for ourselves. Is there a Regulatory Burden or is it on Insurance Companies that have not been regularly 20 years . Is it Insurance Companies shifting money around to protect their pockets . That is why Insurance Companies lobbied hard to keep it out of our hands. I appreciate the notion. I am seeing nods. I seen you agree . How can we evaluate how the Insurance Companies are of two . Are up to . We can decide what premiums are and should all be able to see transparency. I am all for transparency and i appreciate the work you are doing. This is a reminder that Insurance Companies been playing every part game and have underwritten fossil fuels and profit from selling protections from the impacts of these fossil fuels on climate. Now, when Climate Risks are rising, they are trying to hang american emmys out to dry and demanding higher to hang American Families out to dry and are demanding higher premiums. Thank you. Thank you, mr. Chairman. Thank you you, senator warren. The senator from is recognized. Can we agree the fema administered national Flood Insurance program, risk rating to point to 2. 0, is woefully inadequate . Mr. Heller . Yes. Ms. Doris . Yes. Jerry . Since i cannot say your last name. I would not say it is woefully inadequate. Ok. Imperfect as it is, does it make sense to you, mr. Heller, to allow the national Flood Insurance program to expire . No, it does not. Short of getting a better solution, we need to have the back. We are not likely to get the better solution in a few weeks, are we . Know we are not. Do you think it makes sense for it to expire . Norris no. We need to continue to have it as needed. Mr. Jerry . Theodorou it should continue. But not with kicking the can down the road. There needs to be more certainty of availability. Longterm reauthorization of five years or 10 years is more in order. Ms. Doris ms. Norris, if the world became Carbon Neutral by 2050, do you believe that would solve a lot of the problems of the costs of Flood Insurance and Property Casualty insurance . Norris that is a pretty loaded question and i am not a scientist but i do think that is a wonderful about. I would love to know that we could get there. I have thought about it and hopefully you have too. But you dont want to answer my question. Mr. Heller, what do you think . Mr. Heller it will not solve the poverty crisis we have now. It is a part of risk protection. We need to begin to solve this problem. So it will not solve the problem . Mr. Heller it will not solve todays problem. Mr. Jerry . Mr. Theodorou it is the answer to Different Solutions Like Solutions and what we will do during the transition from fossil fuels to energy initiatives. If you were keen for a day, to me what you would do for property costs . Mr. Theodorou i would sign a spotlight on areas where there is disruption. What does that mean . Giphy three specific things you with the top line to fix the problem . Mr. Theodorou California Legislature to repeal proposition 103, to have florida continue its reforms where it has eliminated the abuses, and the third is to educate the public about how insurance works. They know how it works. It is called write a check, and then sell blood plasma to go to the grocery store, which you probably have to do anyway because of President Bidens inflation. Give me something you would do, mr. Heller. Mr. Heller we need to put money into protecting homes, making sure levies are strong. Ok and government subsidies . That is number one. Mr. Heller i would call it government alternatives call it whatever you want. Mr. Heller when businesses in the commercial sector were afraid they could not get terrorism insurance anymore as of 9 11, we came in the government gets into the reinsurance business. Number three . Mr. Heller lets get regulators on the ball down the states to go through the data. Ok. Get the regulators on the ball. What is number four . Mr. Heller wow, i get four. Thank you. It is to address the need of lower and moderate income people by making sure we are not creating an Insurance Market that spices and ices people basal socioeconomic status with things like penalizing can i give ms. Norris a chance . For time expires after your time expires after you answer. Ms. Norris i will do do just two. We need to invest in ways to be able to get our communities and buildings resilient. Government subsidies. Number two . Ms. Norris we need to stabilize the market. If the government into the reinsurance business. Thank you. Senator van hollen. I think all of you for your testimony i think all of you for your testimony. Ms. Norris, thank you for pointing out that seniors and low income individuals are especially vulnerable, and addressing ways to address that. I think you as well mr. Heller talked about that. I think there is agreement that the headline from the Washington Post a few days ago sums up the problem. The headline was home insurers cut National Disasters for policies as Climate Risks grow. In the next was that insurers said extreme weather has led them to raise premiums, exclude not a disaster protections, and more. All three of you agree that a problem . Ms. Norris absolutely. They understand, mr. Theodorou, that you indicated the price caps exacerbated the problem. Clearly there is some price point at which Insurance Companies have to raise premiums to cover the cost of damage. And if someone caps the price lower than that, they will exit the market, right . Mr. Theodorou that is right. It is capped at 7 . So if you remove the cap i understand your argument. You have to choose between exiting the market or raising premiums. Which includes on many low income homeowners. Mr. Theodorou to also encourage not building or living in the wildland urban interface. There was a 39 increase in people building in the force of california where they are most exposed to the wildfires. And in florida, the six largest laser people to move to largest place for people to move to. Places where they will get hit. I was listening to all your responses and a lot the proposals involves some form of government subsidy, whether for zillions, or whether for resilience, or also an nfip type of approach. Yes but i would say the nfip could be converted to a backstop. If i could just quickly correct, mr. Theodorou, there were no price caps in california. That was a way to try to install a boogie man. Unfortunately, the rate increases have been 12. 5 . There is no rate cap but customers but companies have to justify their rates increasing to be accountable. I am all for talking about senator warren on her letter to collect the data. We all know we have a problem because Climate Change is increasing the intensity and frequency of natural disasters. This obviously has a cost. The question in my view is, who will pay the cost . In my view, we should look to those who have actually generated the reasons for the damage. I dont think taxpayers should have to pay for this. The market failure is to price the cost of Carbon Emissions into the atmosphere that is teen that the atmosphere in causing these natural disasters. Rather than ask mr. And ms. Taxpayer to have to come forward, should adopt a proposal that ive put forward and will continue to pursue to create what i call a pay a polluter pay fund. To ask the biggest polluters to put money into a fund to pay this. If i can get a response from you on that idea . Of course, we would be supportive of that. But let me make a slightly nuanced point about this. The Insurance Companies continue to underwrite a lot of fossil yield producers in the country and interviewed the investments fossil fuel producers in the country and imbued the investments. Then they downstream to the external cost to homeowners and businesses and people who have homes through Insurance Premiums. They make a profit on Climate Change on the front and but then also get it from consumers with policies and reduced coverage. I would report that there is a private sector source to cover these costs so it does not get slowed down to individual families. Yes, a private sector force raised on those 4 responsibility damage. It is a great idea. I would also say that Climate Change has been coming and is now here and we are all seeing it exacerbate. If we had a single solution 10 years ago to start, maybe we could have mitigated the issues today. We need more solutions. I would support that along with other ones that have been brought to the table today. We need to act in many ways to stop what is here right now. Thank you. The intention is noble but may miss the target because they largest admit ors the largest emitters of fossil fuels are outside the ordinary propertyCasualty Insurance marketplace. They have captives. The largest oil and Gas Companies have captives in their own Insurance Companies which could be beyond the pale of regulators. Just to be clear, we would be capturing the fees based on those who pollute and they would have to frayed the cost. It is a marketbased solution. Thank you, mr. Chairman. I would like to start by reiterating the importance of preserving our statebased system of insurance regulation that is effectively protecting consumers for over a century. I am concerned that the recent actions of the Administration Risk undermining the very premise of the system. Rather than leveraging the expertise of state insurance regulation, treasury and fio are acting unilaterally to push this administrations climate agenda, including by requesting a plethora of highly detailed information from insurers. Not only has the treasury been unclear with how they intend to use the data they collect, but the effort would be duplicitous in many ways as many state and the naic already collect this much data to help understand the impact of disasters and weather events. Any efforts from the treasury to sidestep state insurance legislators blatantly undermines intent. Fio should work with and not around state insurance officials that have decades of experience excepting the market impacts of these catastrophic weather events. We have had an active Hurricane Season last year and have already seen a number of named hurricanes in 2023. The frequency of such weather events has impacted the property Insurance Market. Insurance premiums, like all prices, our market signals to consumers and the property insurance space that the higher Insurance Premium indicates the existence of higher risk. As someone who lost my house and car and things in a storm, i get it and i understand the importance. I also come from a state ravaged by storms, whether they be tornadoes or hurricanes. I understand the importance of getting this right. In response to a higher Insurance Premium, states like california have implemented overly restrictive regulations, including price controls on insurers. In essence, this deprives homeowners of market signals that could steer them towards building in better, less dangerous places or encourage them to build better disaster proof homes. I want your thoughts. Mr. Theodorou. I will do my best to get that right. Can you tell me, do you agree . Mr. Theodorou id 100 . I agree that the efforts to get more data on insurance and catastrophe exposure is superfluous. Data is there. There is data from noaa and Insurance Companies looking at catastrophes, frequency, severity and more. Because there was disagreement about whether there is increasing frequency and severity, but we have been studying this. A report should come out in a few months. Also the federal insurance office. If we look at its remit, what is it statutorily supposed to do to monitor the industry . Out to direct, manage or insert itself. It is an agency without a mission that was created during dodd frank when people thought the Insurance Industry was responsible for the Global Financial crisis, but it was not. The federal efforts have been introduced, however wellintentioned, but have not been successful. When you look at the financials of the nfip or the Cross Insurance program, efforts have failed going back to hurricane andrew of 1992. Lets not repeat the mistakes of the past. They only have a little time left so i will transition into bragging on my state. We have heard a number of questions and solutions. I want to tell you somewhere where i believe alabama has gotten it right. We have seen firsthand what effective efforts look like. We have had a stand Great Program a state Grant Program that fortifies roots. The program was a response to damage from hurricane ivan in 2004 and Hurricane Katrina in 2005. It was created to make more Resilient Homes and encourage and continue issue was policies in stormprone communities with the goal of reducing future hurricane damage. When a hurricane hit alabama in 2020, nearly 16,000 homes and buildings with fortified roofs remained in tact remained intact. This resulted in lower insurance claims with less debris cleanup that allowed communities to reopen and recover more swiftly. This is what effective action looks like were state officials identified a solution and put into practice it without regulatory overreach, something that works. Just last week, due to the great work of governor kay ivey, commissioner mike fowler, and a director, alabamas new council met for the first time to focus on publicprivate collaboration to help build stronger, safer, and more we communities. This is a number is another great example of effective estate communities. I am out of time but i appreciate any, as you have on the great work. Auntie is my understanding louisiana has copy the program it it is my understanding louisiana has copy the program. Doing the right behavior leads to lower losses and lower premiums. In my written testimony, i pointed out the fortified program in alabama. This is a model where government can partner with community. Not enough insurance are incentivizing by giving people discounts or making policies available when they do fix their homes. This is an example of front and work like in alabama, rather than cleaning up afterwards. Senator cortez from nevada. Let me follow up on the conversation. As someone who worked with my state division of insurance, i believe the states have incredible data that should be utilized. Mr. Heller, you noted that the father offer expedited review to smith filings to add discounts for homeowners to take mitigation measures. What are ways we can encourage insurers to incorporate better data when they set premiums . Thank you. We worked with the Nevada Division of insurance on exactly this. By laying out really clear discounts to homeowners that insurance should be providing based on science out there. We have insurance building for home safety doing a lot of great work on this front, and groups led by policyholders. You build stronger roofs, clear brush, and take actions, you can reduce risks. That reduces premiums but unfortunately, too Many Companies have not followed through on getting those discounts. But many have. In california, they are required. In nevada, there are incentives. These should look at what is being done in nevada, california, and alabama. When we look at what is safer, then we reduce costs. In nevada, we have seen rain and recently, we have seen extreme weather absolutely happening across the vada across the vada and flooding that has been devastating to some structures, particularly in southern nevada. Nevada worked hard to build for communities. The u. S. Army corps of engineers help this in certain areas of the state. There are great partnerships that can happen. There needs to be more opportunities and incentives to lower those premium costs in the way homeowners do. Let me have you talk about manufactured housing in your written testimony, you said people who live in manufactured homes pay more for lower quality Homeowners Insurance. Can you explain how insurance policies seem to fail 28 Million People who live in manufactured homes . Mr. Heller that is one of the more disastrous segments of the market heads lower income homeowners and older home owners quite a bit. These policies for manufactured homes are generally with an actual cash value so they depreciate the value of the home when you need to file a claim. They have weird exclusions. For example, the hvac systems in those homes are considered contents which has less coverage than what we see in normal homeowner policies where they are part of the home for rebuilding. For some people, you cannot collect your full claim if you do not rebuild in the same ways. If your home plot does not reopen, you cannot. You cannot use the policy you have been paying for. Yet these manufactured home policies which the market is leaving less competitive than the regular homeowners market is more expensive per dollar. And sometimes just altogether. It is a tough market to be someone living in manufactured or mobile home. At the time when manufactured homes are different than the manufactured homes of the past. There are more people that should be taking advantage of the lower cost for manufactured homes that provided you of comfort and security. Yes. We have done a great job of making more Affordable Housing through manufactured homes, yet insurance is substandard for people either because they did not want to or because that is all they can afford in these communities and types of homes. We need to do a better job to make Insurance Coverage better and regulators need to Pay Attention to these forms because they are not good enough. Let me stay on the Affordable Housing piece. Vada is no different and something i have been working on. I appreciate your testimony telling us rising insurance costs undermine not just the future of affordable policy, that those that currently provide homes to people. Can you expand that people may be forced out of the Affordable Housing market because of insurance and operating costs that outpace feasible rent . Ms. Norris thank you. Affordable Housing Community runs on is the regulated world. There is a lot of different programs of affordability, but they all run on basic principles. Number one, as people move into our communities or people who need to move into our communities. They cannot make too much money. Rule number two is we cannot charge them too much money to live there. That is the role of Affordable Housing. Whenever you have a serious situation like this with catastrophic increases of its senses that rise quickly, there is no way to do an adjustment of the rent. We dont want to just do a dramatic increase in rent for folks that cannot afford it. What this leaves us with is a situation where our expenses are fitting our operational margin or our ability to meet our costs. This is a roll problem. Because the regulators often, for example with hut, we can go and ask for a rent increase but if an Insurance Premium, which his in the middle of the year, and we already have a rent increase, we cannot ask for another rent increase. If we ask next year, it may take them a significant amount of time to give that. We are set in a position where the rents cannot be expenses which forces us as owners to make really bad decisions. We have to either stop during stop doing Certain Services or defer any expense we can. Eventually, we could end up saying we cannot afford to do this. It can put properties at risk which can put peoples homes at risk which is like 100 or 200 people at a time. The impact on Affordable Housing is significant compared to the market. Does that help . It does. Thank you. I know my time is up. One minute. Even less than that. I wanted to add to one point because of something you brought up. Nonprofit organizations are having trouble in the market. You have been working on making the rest retention groups available to the rest retention groups available to nonprofits. That is something we should be making sure we add in because there is the opportunity to add a private Market Solution to help avoid the chaos we are seeing for nonprofit Housing Developers for nonprofits and Housing Developers. I want to thank him for sharing on my behalf. Senators who wish to submit questions, they are due one week from today, thursday, september 14. You have one week then two to respond to any questions. Throat here are some of you through at the end of the week. A hearing is returned. Their eyes were watching god had on africanamerican culture