During Wednesday’s Senate Banking Committee hearing, Sen. Pete Ricketts (R-NE) spoke about rising homeowners insurance costs.
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00:00for being here today. The four years the Biden administration we saw reckless
00:05spending trillions of dollars on partisan programs that drove up
00:09inflation. Average home or average family in America had to pay $13,000 more
00:16to have the same standard of living after Biden as they did before Biden and
00:22so Mr. Gordon I think you reflected that in your testimony that inflation was the
00:27primary driver of that. We've seen in Nebraska when we're talking about these
00:33homeowner insurance rates that the average home insurance premium has gone
00:37as high as now at up to $5,121 for a home valued at $300,000.
00:44The average home insurance annual premium rate in the U.S. last year was $2,100,
00:50$5,100 or $51. So that's a difference of $2,970 that
00:57Nebraska pays higher in insurance premiums than the average in the rest of the
01:02country. That's a one-two punch for homeowners who have just experienced four
01:06years of high inflation where we've seen all these costs for everything from
01:09groceries to gasoline go up then to have to pay that as well. Now one of the
01:16things that we have in Nebraska is we do have weather. We've had since I was a kid.
01:20We had a 1975, we had a tornado that came through Omaha. We had another tornado came
01:25through last year so about once every 50 years or so we've experienced that in
01:30Omaha. But you know in Fremont actually four out of the last five years they've
01:34had hail. Just recently they had four inch hail. Now unless we're talking about
01:39micro climate change Fremont's community it's 45 minutes from Omaha yet that hail
01:45didn't really impact any other communities it was just bad luck that
01:48Fremont got hit with that. So I think it's hard to say that climate change is gonna be the
01:52primary driver of that. But Mr. Gordon I wonder if you know you can comment on do
01:58you have some thoughts on specifically Nebraska why we've seen these homeowner
02:03insurance rates go up. Have you got any specific data with regard to Nebraska?
02:08So we do have specific data on Nebraska the NAIC just released and we'll provide
02:14that to your office. I will just say Nebraska is a great place to live and one of
02:19the trends. We have the best place in the world. One of the trends we've seen
02:23accelerating after the pandemic is people moving to states and building nicer more
02:29expensive homes and then you add 40 year record inflation and then you add on top
02:35of that even higher inflation in the building materials and supplies and then
02:40you add a little bit from climate change and legal system abuse and so forth and
02:44we've gotten about an eight percent annual increase in the cost from severe
02:48convective storms like hail and tornadoes that are hitting Nebraska. So the
02:52weather accounts for about eight percent of that overall is that what you're
02:55saying? So the increasing losses are about eight percent. The climate change is
02:59only about one percent of that eight percent. The rest is the 40 year record
03:03inflation and even higher inflation in the building materials and supplies. Mr.
03:07Epstein do you have any data specifically about Nebraska and why we're
03:10seeing these big insurance premium costs? Well I think the most important data that
03:15hasn't been covered yet is just this because we've heard repeatedly this claim
03:18that you know it's climate change extreme weather that's driving all these
03:21local insurance premium increases but if you look at we have macro data for
03:25measuring this kind of thing things like accumulated cyclone and energy
03:29hurricane frequency hurricane intensity and what we see is we don't see any
03:33significant changes in there we do see some warming but we're not seeing any
03:36significant changes the hypothetical changes are in the future we also see a
03:40adjusted for GDP globally damages are not going up so if we have an insurance
03:44premium thing it's not going to be driven by climate it's driven by other
03:47things including lack of resilience and or subsidizing people to take on way too
03:52much risk and it's really simple just we need to stop through all these
03:56disaster relief things we need to stop subsidizing people for taking risks and
04:00make others do it that's just leading to all these cascading problems there's no
04:03way around that. So Mr. Epstein if I understand what you're saying one of the things
04:07you're saying is hey if you look over the at least as long as we've got data which is
04:10probably like the last hundred years we've probably got really good data and
04:14you look at the occurrences like things like tornadoes in Nebraska or
04:16hurricanes in the Gulf they aren't occurring any more or less than they were.
04:20Yeah there's just not statistically significant trends there's there's
04:23projections about the future of like storms will become 10% more intense and
04:27less frequent which that itself is not very dramatic it's just you can have
04:30mild change that's just not that discernible it's just not that big a factor and we have to be real about that it's real it's just small.
04:37And we don't even know if it's net negative in terms of these extreme weather issues.
04:40And so one of the things that you also comment on I'm actually running out of time
04:45though is the insurance environment I just want to highlight in Nebraska we
04:49actually have a great insurance department we don't have some of the
04:52problems that you describe Mr. Epstein with California with regard to that and
04:55they really do a wonderful job in fact Nebraska is one of the leaders in the
04:59insurance marketplace we have many countries companies that are domiciled in
05:02Nebraska because of our great insurance marketplace and great
05:05environment we have in the state. So I just wanted to give a shout out to my home
05:10state industry here. Thank you very much Mr. Chairman. Thank you. Senator Cortez Vasto.