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News + Notes: NAIC Issues National Call for Data, TPLF Sees Dip in 2023, New Ban on Asbestos Finalized and More : Risk & Insurance

The NAIC’s national call for policy and claim is intended to help regulators address a growing crisis in property insurance, but some states are opting out of full participation in an effort to attract new capacity.

NAIC’s Call for Data Meets Resistance

A comprehensive initiative by state regulators to investigate the high costs and accessibility of homeowners insurance faces hurdles, as key states consider opting out of the data request, according to the New York Times.

The National Association of Insurance Commissioners (NAIC), the body that represents state insurance regulators, announced in March that state agencies were seeking detailed data from insurers, including the types of coverage offered in different ZIP codes, recent claims payouts history, customer deductibles and opportunities for discounts through home improvements. The aim was to address the affordability and availability of homeowners insurance and the financial health of the insurance industry.

The data request — the largest and most comprehensive ever conducted at the national level — was set to reach over 400 insurance companies, providing insight into approximately 80% of all homeowners’ plans in the U.S., based on total insurance premiums. Some of the data was to be shared with the Treasury Department to help identify areas where homeowners face the highest risks and living costs.

However, each state regulator has the discretion to participate in the data call, and some states facing the highest risk of damage from severe storms and turbulent insurance markets — including Louisiana, Texas and Florida — have signaled they may share limited data or opt out entirely. This reluctance could create a significant gap in regulators’ picture of homeowners insurance markets nationwide and hinder their efforts to address the complex issues caused by inflation and severe weather due to climate change.

The reluctance of states like Texas and Florida to fully participate, and Louisiana’s complete opt-out, could leave out crucial data. Louisiana’s insurance regulator, for example, has decided not to compel companies operating in the state to share their data, focusing instead on regulatory and legislative efforts to attract insurers and stabilize the market.

Despite this, regulators maintain that the program represents a significant advancement in understanding homeowners insurance. The data collected could shed light on why major insurers have withdrawn from states like Florida and California, and why some homeowners, unable to afford rising insurance costs, have reduced their coverage.

Fannie Mae and Freddie Mac Postpone Updated Guidance for Property Insurance CoverageFannie Mae and Freddie Mac Postpone Updated Guidance for Property Insurance Coverage

Earlier this year, at the direction of the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac updated their selling and servicing guides to clarify various lender and servicer responsibilities related to monitoring and verifying property insurance coverage.

The updated guidance was set to take effect on June 1 and would have impacted a significant portion of the property insurance market by requiring mortgagors to acquire replacement cost value (RCV) coverage for their property.

Given that the National Association of Realtors estimates that Fannie and Freddie support approximately 70% of the mortgage market, this change would have a real-world impact on the many homeowners who are unable to satisfy the coverage requirements or who are forced to purchase a higher-cost insurance product to do so.

However, on Wednesday, at the request of the Big “I" and other stakeholders, Fannie and Freddie announced that the June 1 implementation of this updated guidance is being postponed indefinitely. The Big “I" was the only agent trade association to weigh in on this issue with the FHFA and government-sponsored enterprises (GSEs), communicating with each and submitting a joint letter with the National Association of Mutual Insurance Companies stating that the guidance would exacerbate existing challenges in the property insurance market.

The action taken by Fannie Mae and Freddie Mac to delay implementation of the guidance will allow stakeholders to come together and discuss the issue and the Big “I" appreciates the willingness shown by FHFA and Fannie and Freddie to reconsider the updated guidance.

The guidance would require homeowners to obtain complete RCV coverage for all aspects of their homes and explicitly states that actual cash value (ACV) coverage is unacceptable. Importantly, this mandate includes roofs, even though lenders and servicers in the vast majority of states have long accepted the use of ACV for roofs.

Fender benders mean serious high-tech repairs now

Auto body repair was a pretty straightforward business not that long ago. When metal got bent in a crash, someone needed to unbend it. It was a craft.

These days, it’s high-tech. Virtually every new vehicle sold in the last few years has sensors and cameras, including radar and sonar, throughout the body of the vehicle.

Those sensors dot the body of a car like little round buttons. Sometimes shiny black boxes are also embedded in the grille and what look like camera lenses are mounted behind the windshield up high near the rearview mirror.

These have made the repair process more complex because, unlike a smashed fender, a sensor or camera can’t just be bolted or welded back on. To work, they need to be carefully and precisely aligned. It’s changed the process of collision repair a lot.

“The change that we’ve seen in the last five years is greater than we’ve seen, probably, in the last five decades,” said Todd Dillender, chief operating officer of Caliber Collision, one of the biggest auto body repair companies in the United States with more than 1,700 locations across 41 states.

According to a study by the consumer automotive group AAA, fixing sensors and cameras now accounts for more than a third of the post-crash repair costs in a new vehicle.

It’s important to note that no one, including AAA, recommends not getting these features because of repair costs. Systems like automatic emergency braking, blind spot monitoring, and rear cross-traffic alerts can reduce your chances of getting in a crash in the first place. That’s one reason automatic emergency braking is now nearly universal on new cars and, in a few years, will be required in the United States.