Property insurance rates have been shot in the USA for yearsAnd a number of factors contribute to the problem, such as inflation, expansion of construction in high -risk areas and losses by natural disasters.

The devastation of California in progress in California And last year’s hurricanes in the southeast are feeding the fears that the huge times of insurance companies in these states will be recovered, at least in part, by the national companies that increase the rates in other states that do not were affected.

Aerial view of the sun rising beyond the houses that were burned in Eaton Fire on January 21, 2025 in Altadena, California. Several forest fires caused by the intense winds of Santa Ana have burned in Los Angeles county and left at least 27 dead. (Mario Tama/Getty Images/Getty Images)

A source that supports this concern comes from a Harvard 2022 study Business School, entitled “Climate risk insurance prices: regulation and cross subsidies”, which concluded that “homes in low friction states (risk) disproportionately support the risks of homes in high friction states “.

It insurance industry He says it’s not true.

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Robert Gordon, Vice President of Policy Research at the American Property Association (APCIA), says he does not question some of the data used by the study, but argues that his conclusion is incorrect.

He explained in an interview that insurance is regulated by the state and all states prohibit rates that are discriminatory or excessive. Therefore, the regulators do not allow companies to charge excessive rates arbitrarily.

A owner inspects the damage to his house after the hurricane Helene Toqués Terra in Horseshoe Beach, Florida, on September 28, 2024. At least 44 people died in five states in the United States whipped by the powerful storm Helene, they said The authorities on September 27, on a stern. (Chandan Khanna/AFP Via Getty Images/Getty Images)

Beyond these regulations, insurance is one of the most competitive industries, he said. There are thousands of insurance companies, with hundreds in each state, and many of them are not national companies, but only state -owned companies or regional insurers.

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“Therefore, if a national insurer is losing money in California, this does not mean that he can increase his rate at Iowa or Vermont or any other state, because he is competing with all these companies, many of which do not even do business In California, so they will not raise their rates due to California’s losses, “said Gordon Fox business.

He compared the situation to the gas stations. Where, if Chevron, for example, had losses in California, the company would not increase prices by 50% in Oklahoma, because everyone at The Sound State would go to a different gas station.

You can see feathers of smoke as a burning brush fire at Pacific Palisades, California, on January 7, 2025. (David Swanson/AFP through Getty Images/Getty Images)

Each time the insurance rates increase significantly, companies see an increase in insurances that buy and change their business. This is what the industry is seeing right now.

Although the authors of the Harvard study and the insurance industry do not agree with the conclusion of the study, they do agree at various points, including what is happening in CaliforniaHe has sent insurers to flee in recent years so that the regulators will not allow the operators to raise the rates to satisfy the market.

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“What we see in many states with type suppression is that you have these explosive residual markets, basically government insurance programs,” said Gordon. “And these government insurance programs subsidize rates, especially the highest risk properties, which, ironically, eliminates very important environmental risk signals such as: Do not build in wooded areas or do not build in the prone areas. In hurricanes, and if you do, make sure there is a proper risk mitigation, (such as) best construction codes, etc.

He added that when states suppress the insurance rates and subsidize construction in disasters areas with government insurance programs such as the California Plan, it seems that these programs are reducing market rates. But all he really does is mask these signs.

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The authors of Harvard, Blood Oh, Ishita Sen and Ana-Maria Tenekedjieva, wrote in their conclusion that “when the rates no longer reflect the risks, the information role of the insurance rates is broken.”

They added: “(a) in the long term, rates fixation friction could make insurers less prepared to deal with large losses, and insurers can respond by leaving the markets completely or abandoning important features of the product.”