Op/ed: A Blueprint for Solving the Homeowners Insurance Crisis
Rise of Extreme Weather Events—and Claims—Demands Private-Public Solution, Risk Expert Says
A UMD expert in risk management calls for a national solution to a national crisis: failures in the homeowners insurance market amid a rise in natural disasters, such as that wrought by Hurricane Beryl in Texas last week.
Photo by Brandon Bell/Getty Images
Hurricanes, wildfires and other extreme weather threats are damaging homes and other property at an accelerating pace, pushing the United States toward an insurance crisis, writes Clifford Rossi, a University of Maryland finance professor of the practice and executive-in-residence at the Robert H. Smith School of Business.
Writing in National Mortgage Professional, the risk management expert says the rising frequency and severity of natural disasters has rendered private insurers unable to provide long-term premium stability and ultimately threatens their ability to offer coverage to homeowners.
That solution is the Federal Natural Hazard Insurance Corporation—a private-public approach to providing homeowners insurance across all natural hazards and states that would address myriad failures in today’s insurance market.
As a new, federally chartered government-sponsored enterprise (GSE), the Federal Natural Hazard Insurance Corporation would carve out natural hazards from existing homeowners’ policies, offering a separate policy based on a property’s exposure to the specific natural hazards in that location. The Federal Emergency Management Agency’s National Flood Insurance Program would be absorbed into this new GSE and form the basis for a broader set of insurable hazards to be incorporated into these policies.
Read the rest in National Mortgage Professional magazine.
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