The American Reinsurance Association (RAA) rejected the Hamilton Project’s recommendation to US Re, a federal reinsurance entity that provides homeowners insurance, arguing that the program failed to address the underlying drivers of insurance costs.
The proposal was outlined in a paper presented at the Brookings Institution event and authored by Benjamin L. Collier, Benjamin J. Keys and Philip Mulder.
American Re will sell reinsurance contracts to U.S. homeowners insurance and reinsurance providers to cover the most extreme weather events.
The RAA said the paper misjudged the problem and therefore proposed a flawed solution that failed to address the real drivers of rising homeowners insurance costs.
“Rising homeowners insurance premiums are hitting families across the United States,” said RAA President and CEO Tracey Laws. “Reinsurance costs are proven not to be the driver of rising homeowners insurance premiums nationwide. Actual losses are the primary driver of homeowners insurance premiums, so the federal reinsurance program cannot solve the problem. In fact, it will only shift costs disproportionately to taxpayers living in lower-risk areas.”
“If we are serious about helping American families, we must confront the real causes behind rising costs: more frequent and severe disasters, higher rebuilding costs, construction in risky areas, fraud, and rising legal costs due to excessive litigation and huge expenditures that benefit only a few — primarily entities and individuals who secretly invest in others’ lawsuits. We must work together to find meaningful solutions that truly improve affordability and availability.”
The post American Reinsurance Association rejects ‘US Re’ proposal appeared first on ReinsuranceNew.ws.