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Data collection effort could paint clearer picture of climate change’s impacts on insurance markets

FILE - The burned remains of a home destroyed by the Marshall Fire are shown, Jan. 7, 2022, in Louisville, Colo. (AP Photo/Jack Dempsey, File)
Jack Dempsey
FILE - The burned remains of a home destroyed by the Marshall Fire are shown, Jan. 7, 2022, in Louisville, Colo. (AP Photo/Jack Dempsey, File)

Climate change-fueled disasters like wildfires are straining insurance markets in the West and across the country. But the scale of the problem is difficult to understand due to significant data gaps, which a new effort seeks to fill.

In March, the Federal Insurance Office (FIO) announced its collaboration with the National Association of Insurance Commissioners (NAIC), which represents state regulators, to gather data from large providers of homeowners policies. In the release, Treasury Secretary Janet Yellen said that “Americans across the country are seeing the affordability and availability of their insurance policies decline as a result of increasingly severe climate-related disasters.”

Data was due to the NAIC by early June, and anonymized data will be shared with the FIO through September.

“This type of systematic collection of insurance data does not currently exist,” said Lilith Fellowes-Granda, associate director of financial regulation with the progressive Center for American Progress think tank.

In a recent analysis, she praised the undertaking, but offered several ways to improve it. Among those suggestions is for the data gathered to ultimately be made public, and to expand analysis to include how insurance market instability could affect other institutions, like banks.

“This data call is a critical first step, but it is just the first step,” Fellowes-Granda said.

In a recent letter responding to a number of questions from Congressman Mike Levin (D-CA) and other representatives, several NAIC officials said that “the data is collected under state regulatory authority so there may be limitations on what data can be shared publicly, but commissioners are working through these considerations at this time.” They also said they “do not envision” making company names available with the data, and that “no personally identifiable information about policyholders” is in the data.

Fellowes-Granda also argued that such collection should be routine, as it is for other financial services. In the letter, NAIC leaders said that “it is our expectation this will be an annual effort.”

Fellowes-Granda was also concerned that not all 50 states are fully participating.

In a separate statement to the Mountain West News Bureau, the NAIC said that even without every state participating, regulators will still get “comprehensive, nationwide data essential to making good decisions as they work to protect consumers and the marketplace.”

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, KUNC in Colorado and KANW in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.

As Boise State Public Radio's Mountain West News Bureau reporter, I try to leverage my past experience as a wildland firefighter to provide listeners with informed coverage of a number of key issues in wildland fire. I’m especially interested in efforts to improve the famously challenging and dangerous working conditions on the fireline.