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Industry groups tell Judiciary Committee inflation, repair costs and litigation are driving higher premiums
Summary
Representatives from APCIA and NAMIC told the House Judiciary Committee that rising repair and medical costs, labor shortages and litigation trends are key drivers of higher homeowners and auto premiums and urged policies that support actuarially sound pricing and mitigation measures.
Industry groups representing property-and-casualty insurers framed market pressures for the House Judiciary Committee on Jan. 27, pointing to inflation in construction and repair costs, longer repair times, and litigation trends as the principal drivers raising homeowner and auto premiums.
Nancy Egan of the American Property Casualty Insurance Association (APCIA) told the committee that construction-material costs rose about 44.2% and labor costs about 38.6% over a five-year period and that auto-parts costs rose roughly 44.3% while used-car values rose about 33% in the same interval. She said those increases, together with longer repair times (from about 13 days in 2021 to 15.5 days now) and higher medical payment costs, feed through to higher claim costs and ultimately premiums.
Egan described APCIA’s work on home-hardening resilience standards and investments in highway safety, and she said usage-based insurance (telematics) produces mixed consumer outcomes in the marketplace (about 30% of participants saw decreases, 20% saw increases, and roughly 45% saw no change in APCIA’s survey). She also discussed litigation trends and third-party litigation funding as upward pressure on claim costs.
Gina Rotunno, regional vice president for the National Association of Mutual Insurance Companies (NAMIC), reiterated several of the same themes, noting record catastrophe losses driven by weather volatility, supply-chain and labor constraints during and after the pandemic, and litigation pressures. Rotunno explained the combined ratio as a core solvency metric and said personal lines have shown underwriting volatility, with homeowners underwriting often above 100 (paying out more than premiums collected) across multi-year windows in Maryland and nationwide.
Committee members asked how insurers actually make money when underwriting loss occurs and about state-by-state rank comparisons. Rotunno said carriers commonly rely on investment returns on premium reserves ('float') in addition to underwriting results, and she offered to provide state ranking data on request. APCIA and NAMIC both offered follow-up data as requested by members.
Neither industry witness asked for or was granted formal legislative action in the hearing; both offered to follow up with the committee with detailed figures and comparative data.
