NY Needs Home Insurance Reform, Industry Watchers Tell Regulators

New York isn’t even close to being the most expensive state for homeowners insurance, data shows. But premiums in the Empire State are rising, putting financial pressure on homeowners, renters, and landlords alike, numerous speakers told state legislators at a recent Senate hearing.

The public hearing aimed to address insurance affordability for homeowners, renters, and landlords and to jump-start policies for greater access and affordability.

“Both homeowners and multifamily property operators have reported substantial increases in the cost of insuring their property and, in some cases, have had difficulty obtaining and maintaining insurance coverage,” according to the public hearing announcement.

Climate change-driven natural disasters, inflation, flawed risk modeling, insurance fraud, and litigation are pushing New York’s home insurance rates higher, multiple organizations said in written testimony before the committee.

“Consumer Reports heard from hundreds of New Yorkers confronting an insurance crisis,” Sara Enright, senior director of safety and sustainability for Consumer Reports, told the committee. “They are facing skyrocketing premiums, shrinking coverage, and cancellations with little or no warning.”

New York’s home insurance landscape

At the end of 2024, New York’s average annual home insurance cost was $2,732, according to Insurify data. That average puts the state in the middle of the pack for the nation’s state-level home insurance costs. Vermont had the cheapest home insurance, at $1,208 annually, while Florida’s was the most expensive, at $14,140.

Insurify’s data scientists predicted New York’s average would increase by 5% ($123) by the end of 2025 — the 14th-lowest increase of any state.

“Homeowners insurance rates in New York are below the national average, although they are higher in New York City and coastal New York,” the American Property Casualty Insurance Association (APCIA) stated in its testimony to the committee. “But property insurance losses and corresponding rates have increased significantly over the last five years nationwide and in New York.”

Since 2020, New York homeowners have faced average home insurance premium increases of more than $1,000, Consumer Reports’ Enright said. That number is “much higher than the average increase across the U.S.”

“Additionally, nearly a half million New York homeowners are completely uninsured,” she said.

Drivers of the state’s insurance affordability crisis

Testimony from multiple organizations pointed to a handful of factors behind New York’s burgeoning home insurance crisis, including inflation-driven increases in materials and labor costs, increased weather-related claims due to climate change, legal system abuse, and regulatory costs.

“Insurance is the ‘canary in the coal mine’ for climate crisis,” said Dave Jones, director of the Climate Risk Initiative at the Center for Law, Energy & the Environment (CLEE) at the University of California, Berkeley, School of Law. “And the canary is dying.”

In the past decade, climate change caused nearly a third of insured natural-catastrophe losses around the world, Jones told the committee. Rising insurer losses in turn lead to rising home insurance rates or insurer withdrawals from high-risk areas, he noted.

“New York City has the highest residential construction costs in the nation in part because it has the second-highest litigation costs per capita in the nation,” according to the APCIA’s testimony. Strict regulation and high rates of fraud drive litigation costs, the organization testified.

One in 12 New Yorkers are involved in a property-related lawsuit, John Crotty, president of the Milford Street Association Insurance Company, testified. And “weak or marginal claims are often settled because defending them is too expensive, further driving up costs,” he said. “The cycle feeds itself.”

What’s next: Potential legislative actions

Multiple recommendations emerged from testimony presented to the committee.

Chiquita D’Arbeau, executive director of the Albany Housing Authority, called on legislators to require greater transparency from insurers regarding rate-setting practices, hold insurers accountable for unfair underwriting practices, and require companies to apply property-specific underwriting.

Legislators should also prioritize policies that foster resilience to weather disasters and “support innovation in risk management,” the National Association of Insurance Commissioners said in written testimony. “In our experience, the most effective path forward is not simply to react to market disruptions, but to anticipate and mitigate risk before disaster strikes,” the organization testified.

Jones urged legislators to require insurers operating in New York to bring subrogation claims against major fossil fuel companies and require insurers to stop investing in fossil fuels. The state should also require insurers to consider resilience measures at the property level in their underwriting.

Finally, Enright urged legislators to adopt a “Homeowners Insurance Bill of Rights” that would, among other provisions, require greater clarity from insurers on what policies will and won’t cover and base underwriting decisions on property-level risks rather than financial factors like credit.

The bill would also require insurers to provide incentives for homeowners who make fortification changes and faster, more helpful claim payouts following disasters.

More than 43,000 people have signed a Consumer Reports petition backing the Homeowners Insurance Bill of Rights, she said.

Committee member Sen. James Skoufis, D-Cornwall, said state lawmakers are considering what policies to take up in the next legislative session.

“Some of the responses that we can move forward with when we get to session in January include making sure regulators have all the tools and the mandates they need to ensure insurance companies are not ripping off their policyholders,” he said, according to ABC’s Albany affiliate.

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