The U.S. Senate Committee on the Budget convened on December 18, 2024, to address the escalating crisis in the insurance market driven by climate change. The meeting featured testimony from experts, including Ben Keys, a professor at the University of Pennsylvania's Wharton School, who highlighted the deteriorating conditions in the homeowner's insurance market.

Keys reported that the situation has worsened significantly over the past year and a half, with both affordability and accessibility reaching critical levels in many communities. His research, which analyzed data from 47 million homeowners insurance premiums between 2014 and 2023, revealed that premiums are rising sharply, particularly in areas most vulnerable to climate-related disasters. This increase is attributed to inflation, higher reinsurance costs, and insurers' responses to increased disaster losses.

The testimony also pointed out a troubling trend in policy non-renewals. Data collected by the committee indicated that the average non-renewal rate has doubled since 2020, with the highest rates occurring in states like Florida and California, as well as in other high-risk coastal and tornado-prone areas. Keys emphasized that this trend forces homeowners to seek new insurance providers, often at higher costs, complicating their financial situations.

The implications of these developments are profound. The rising costs and reduced availability of insurance threaten home values, which are crucial for household wealth, and jeopardize local governments that rely on property taxes for essential services. Additionally, the crisis poses risks for major mortgage entities like Fannie Mae and Freddie Mac, particularly as the number of flood insurance policies has declined significantly.

Keys called for a coordinated federal effort to improve data collection and distribution regarding insurance costs and risks, arguing that better information is essential for households and policymakers to address the challenges posed by climate change. He concluded by noting that the current insurance landscape leaves many households unable to secure necessary coverage, underscoring the urgent need for action.

The meeting underscored the critical intersection of climate change and the insurance market, highlighting the need for immediate and effective policy responses to mitigate the ongoing crisis.