For many, it will come as no surprise that home insurance rates are skyrocketing. From 2019 to the second quarter of 2024, the average increase has been 44%. For those who pay their homeowners insurance in their mortgage payments, this may explain why their mortgage payments keep increasing.
While the rates have gone up, for-profit insurance companies have seen their income and stock prices take off. America’s 10 Largest P&C insurance companies command almost half (47%) of the market, with the top 25 insurers accounting for two-thirds of the overall share.
Some insurance companies have remained mutual, returning a portion of the profits to policyholders. However, most companies in the United States are for-profit entities. Some larger companies that call themselves mutuals, like Liberty Mutual, changed their operating structure to become a conglomeration of stockholder-owned companies.
Over the last two years, insurance companies’ stock prices shot up as consumers were forced to pay more. Berkshire Hathaway, which owns Geico Insurance Company stock, rose from $319 to $451. Met Life’s stock price went from $51.56 to $82.99, and AIG, the company the American taxpayer bailed out, went from $48.78 to $72.81.
The rate increases underscore the power of the insurance companies. All across the country, rate increases are making housing less affordable and pushing it out of the reach of middle-class families. Some insurance companies refuse to sell in states that see the results of global warming, fiercer storms, flooding, hurricanes, and tornadoes.
The insurance companies, many of which are also mortgage and loan companies, know that it is almost impossible to get a mortgage without buying homeowners insurance. Insurance companies are today’s red liners. By refusing to sell insurance based on a vacant house on the block, the area the home is in, and the type of roof the house has, insurance companies are deciding which neighborhoods will face a decline.
No other industry sells a product and then charges if you use what you bought, but that is what insurance companies do. Making a claim becomes part of your “insurance record,” and you usually get surcharged. The record of the claim allows other insurance companies to refuse to offer policies or offer policies at much higher prices. Imagine if the company that sells washing machines forced you to pay more every time you used it, called up other companies, and urged them not to sell a replacement if you tire of continually paying after each use.
The industry’s power is so great that the PA insurance web page lists nine examples of insurance fraud; not a single example involves insurance companies not paying claims, redlining, or finding a way to discriminate against minorities without mentioning race. Yet insurance companies breaking laws and refusing to pay legitimate claims create the largest problems.
Many consumer advocates suggest that consumers shop around to find lower rates. While that always sounds like good advice, it misses the control the insurance companies have. Because the companies can violate anti-trust laws, they can combine insurance coverages, making shopping harder.
Insurance companies can also offer “incentives” to stay with the company based on the abuses the insurance company can get away with. For example, after a certain number of years of renewal, insurance companies offer “accident forgiveness,” agreeing not to charge for the first use of the policy, making shopping for prices less valuable.
PA Insurance Commissioner sent a press release in November stating the department has saved consumers $93.8 million. Hall Monitor has asked the Commissioner’s office to provide the rate increases that were reduced. We will share the information, if received, on the air this Wednesday at 6 pm on Philadelphia Hall Monitor’s TV show.
Consumer Reports, the magazine of the Consumer’s Union, is asking for help getting our government to force insurance companies to provide information so the constant rate increases can be challenged. They write, “To get to the bottom of the home insurance crisis and propose solutions that protect you, Consumer Reports asked the federal agency that oversees insurance to release data on premiums and claims across the country. The agency has been collecting data since June, and we still don’t have this critical information that could help us hold the insurance industry accountable. Please sign the petition”.
I have signed and ask you to do so as well. Perhaps even our Insurance Commissioner and Governor will add their names. Insurance Companies should not be allowed to price gouge, red-line, or discriminate.
Our reporters sit through hours of city council meetings, dig through piles of documents, and ask tough questions other media overlook. Because we’re committed to addressing Philadelphia’s poverty crisis — and challenging those who sustain it. If you think this work is important too, please support our journalism.
We’re counting on readers like you.
