Official Congressional Record
Mr. President, climate change is real. Simple proposition. Earlier this year, I came to the floor and asked my colleagues if they could all agree on that simple factual proposition. Well, they could not, so I return to the floor in hopes that our Republican colleagues could at least agree to some of the simple truths that make up the larger truth of climate change. I asked if we could agree, for instance, that sea levels are rising as a consequence. There is really no dispute about that, but Republicans objected. I asked if we could agree that the oceans are warming as a consequence. There is really no dispute about that either. In fact, they are warming by about 20 zettajoules a year. Nevertheless, Republicans still objected. So I shifted my focus to economic threats. I asked if we could agree that climate change is driving up the cost of homeowners insurance or that it threatens home values. Very clear propositions demonstrated in real life. But, again, Republicans objected. Well, the closer these threats are to your home, the harder they become to deny. So let me try a narrower simple truth today: Florida's insurance market is gravely stressed by climate risks. That is it. Can we all agree on that? I have explained many times that climate change is driving an increase in severe storms, including hurricanes. This chart tracks billion-dollar climate disasters in the United States between 1980 and today. The pattern is crystal clear. As you can see, these events and their costs are increasing. According to NOAA, of all the climate-driven disasters since 1980, hurricanes have caused the most damage--over $1.5 trillion total adding all that up--with an average cost of $23 billion per event. And hurricanes hit southeastern States--particularly Florida--the hardest. Between 2020 and 2024, nine hurricanes hit Florida causing $244 billion in damages in Florida alone. They went on often to create more damage in other States--but $244 billion in Florida. So what does the data show is happening in Florida insurance markets as a result? First, data I collected as chair of the Senate Budget Committee shows that Florida has, by far, the highest insurance nonrenewal rate in the country--that is the rate at which insurers say to their customer: I am sorry. I know you have been a good customer. We have been insuring you for years, but your property is now so endangered that we can no longer insure you. We are done. You have got to go find new insurance. Florida: Highest nonrenewal rate in the country. Second, Florida has, by far, the highest average premiums in the country--by some estimates, approaching $14,000 per year. Economists expect these costs to continue to rise. This chart predicts future insurance rate increases as high as 300 percent in coastal Florida in the next 30 years--the period of a mortgage entered into today. Just do some quick math. If it is $14,000 now, a 300 percent increase, four times as much, you add--call it a $56,000 annual expense to own a home, and you run a present value of that simple math, that all comes off the value of the home. Even at these high premium rates, many home insurers in Florida are at risk of insolvency. After catastrophic hurricane losses in recent years, many of the major insurers--including Farmers, Progressive, and AAA--all left the Florida market entirely leaving behind small, local, and less stable insurers. Many of those small, local, and less stable insurers have gone bust when claims come in. This insurance problem creates a mortgage problem in Florida. Banks won't finance a home mortgage unless the home is protected by insurance. When banks originate mortgages, they often flip them to government- sponsored entities like Fannie Mae and Freddie Mac. So, a new problem: Fannie and Freddie will only purchase mortgages which are protected by an insurer and only if that insurer has a requisite financial stability rating. Well, to obtain a financial stability rating, insurers pay a rating agency. Given the insolvency risk in the Florida insurance market, how do insurance companies there obtain the stability rating required by Fannie and Freddie? Most go to an operation called Demotech. Mark my words, you will hear a lot more about Demotech as this situation worsens. Demotech has rated nearly all of these small, local companies that it covers ``A'' or above. Well, it turns out these ratings are too good to be true. A recent investigation by the Wall Street Journal found that insurers rated by Demotech are 30 times more likely--30 times more likely--to become insolvent than those graded by other rating companies. So if Fannie and Freddie were to stop accepting mortgages with a high-risk Demotech-rated insurer, the Florida real estate market would come to a shuddering halt. This is the share of the insurance market in Florida rated by Demotech. This is what is left of the traditional ratings, and this is Citizens Property Insurance, which, because it is State-backed, doesn't require ratings. It has its own separate problems. But this Demotech problem is real. Almost 20 percent of Demotech- rated insurers in Florida have gone insolvent in the last decade--20 percent; 1 in 5, gone. An insolvent insurer is, of course, a disaster for homeowners who have to wait, eventually, to be paid by a State-run organization--the guaranty fund--that takes over for the failed, insolvent insurance. Well, two problems result from that. One, the delay in paying claims destroys neighborhoods. It is great to get paid by your insurance company when you have a major claim and your house is wrecked, but if the money doesn't come soon, you can't rebuild and the neighborhood doesn't come back. And we see that in Florida now. Two, other Floridians are on the hook for all those claims. The guaranty fund transmits that cost to other Florida policyholders. Now, Citizens Property Insurance--this one--the State-backed insurer of last resort, has a similar backstop when it can't pay claims, but in real life, those levees to prop up Citizens are often going to be uncollectible. There are credible scenarios in which the losses of Citizens Property Insurance exceed its ability to pay claims, and the assessment scheme fails. Those are plausible scenarios. Well, to defend, Citizens engages in periodic depopulation efforts where it hands off to those same popup, politically connected, Demotech-rated local insurers tens and sometimes hundreds of thousands of homeowners. Boom--the homeowner is dumped into an insurance company she has never heard of. It is a cascade happening. The climate crisis clobbers home values, drives up insurance prices, and causes insurance insolvency in climate- risky areas across the country but nowhere so more than Florida. This is a crisis for families in Florida. The human stories behind this are heartbreaking, and it is growing into a crisis for all of us. Florida's insurance market is the canary in the American climate risk coal mine. As climate change gets worse and risks spread, other States will find themselves in a similar position--my own, being a coastal State, amongst them. So can we all agree on this simple truth: that Florida's insurance market is gravely stressed by climate risks? Mr. President, as if in legislative session, I ask unanimous consent that the Committee on Banking, Housing, and Urban Affairs be discharged and the Senate proceed to the immediate consideration of that proposition, S. Res. 556; further, that the resolution be agreed to, the preamble be agreed to, and the motions to reconsider be considered made and laid upon the table.
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