ABC News 10: New York hearing on insurance impact on housing crisis

By: Johan Sheridan

A joint legislative hearing on November 18 brought together housing providers, insurance industry groups, consumer advocates, and state regulators to discuss the relationship between property insurance and homeownership statewide. Witnesses at the hearing offered opposing perspectives on the catalysts for low homeownership, blaming either the legal system, inflation, climate change, poor regulation over the industry, or the industry itself.

The New York State Senate Standing Committees on Investigations and Government Operations, Insurance, and Housing, Construction, and Community Development convened the public hearing on the cost and availability of insurance for residential property. Several panels debated legislative and policy changes that would make it more affordable to own a home without sacrificing the long-term stability of the insurance industry.

The legislative inquiry launched in August following reports from homeowners, landlords, and “property operators” who struggled to obtain and maintain coverage saw insurance prices increasing. Insurance industry groups blamed skyrocketing reconstruction costs, climate change, and lawsuits, while housing providers and consumer advocates pointed the finger at a lack of regulatory transparency, discriminatory practices, and the decisions and actions of insurance companies.

The hearing was spearheaded and the committees chaired by Democratic State Senators Brian Kavanagh (Housing, Construction, and Community Development), James Skoufis (Investigations and Government Operations), and Jamaal Bailey (Insurance).

According to Enterprise Community Partners, insurance has been the largest and fastest-rising operating expense in affordable housing, increasing more than 110% since 2017. The current average homeowners insurance premium in New York is $1,900, according to the American Property Casualty Insurance Association, compared to the national average of $2,470. APCIA also said home values in New York surged 94% over the past decade.

The insurance industry, meanwhile, argued against the perception that their businesses reap excessive profits. The National Association of Insurance Commissioners tallied fully licensed and regulated insurance carriers in New York as only making a 0.2% annual profit from selling insurance in the past decade.

The industry’s overall profit, including investment income, was 6.7% during that same period, slightly below the national average of 6.8%. APCIA claimed that for apartment buildings in New York City, general liability coverage operates at a loss, paying out more than $1.01 for every dollar collected over a five-year period.

Meanwhile, almost half million New York homeowners are completely uninsured, according to the New York Housing Conference and the nonprofit consumer organization Consumer Reports.

Compared to other states, New York’s market remains stable—according to Department of Financial Services Acting Superintendent Kaitlin Asrow—thanks in part to a strong regulatory framework. DFS is the state’s main financial regulator, responsible for keeping insurance rates affordable, adequate, fair, and competitive without compromising the profitability of insurance businesses.

Their data showed that New York’s personal residential property insurance nonrenewal rates are among the lowest in the country. Still, at the hearing, Asrow argued that the cost to repair and rebuild homes increased by an average of 45% between 2020 and 2023, while premium increases in New York during 2021 to 2024 were only about half the national average.

Still, Asrow warned that the state has to act fast to prevent insurance carriers from raising premiums further or withdrawing from the state altogether. She cited New York’s rate of nonrenewals as among the lowest in the country.

The Real Estate Board of New York—representing commercial, residential, and institutional property owners—showed that the combined cost of property and liability insurance is the fastest rising expense overall. According to their analysis, these insurance costs jumped 110% from 2017 to 2024, outpacing administrative costs (+51%) and routine building repairs (+35%).

Rising insurance rates

Affordable housing providers and small property owners reported huge premium increases and a shrinking market. Nonprofit housing finance organization the Community Preservation Corporation, for example, said insurance has risen 61% on its portfolio of rent-stabilized properties in New York City since 2020. And, at an average of $1,636 per unit in 2024, insurance costs made up 16% of their expenses on each unit outside of NYC.

REBNY testified that average insurance costs per income-restricted apartment unit rose from $712 to $1,495, representing the 110% increase also cited by Enterprise Community Partners. In the Bronx, that per-unit expense reached $1,806, whereas the local median monthly rent was $1,322.

The NYHC found that premiums for affordable apartments spiked 103%, from $869 per unit in 2019 to $1,770 per unit in 2023/2024. Among rent-stabilized properties that were surveyed by the New York Apartment Association, total insurance costs rose 113% per unit from 2020 to 2024, from an annual average of $703 to $1,501.

Some providers had even worse hikes, particularly on higher-limit policies. In one instance, a Manhattan cooperative saw annual premiums grow 353.16%—from $70,789 to $320,788 for 140 units—per year, according to the Council of New York Cooperatives and Condominiums. In another, a Brooklyn homeowner on a fixed income successfully negotiated a $250 reduction in her premium after facing a $2,000 increase, with the help of nonprofit services.

The Council of New York Cooperatives and Condominiums referred to another Brooklyn coop where a premium increase added annual costs of $2,985 per household.

Based on Rent Guidelines Board data, the Building and Realty Institute of the Hudson Valley reported that Rockland County saw a 67.2% increase in insurance costs between 2023 and 2024, while Nassau County saw a 25.1% increase and Westchester County saw 22.5%. And the Supportive Housing Network of New York described how the nonprofit Services for the Under-Served spent over $16 million on property and casualty insurance in 2025. This compared to under $6 million in 2022.

And the public housing provider the Albany Housing Authority reported that a $150,000 liability insurance quote was withdrawn after an insurer miscategorized the property as a shelter. That’s because it featured Empire State Supportive Housing Initiative units—affordable housing with state services targeting at-risk individuals and families.

For affordable multifamily properties in New York, landlords can’t pass on their rising costs to their tenants because of strict rent limits. This strains their cash flows, depletes reserves, and forces them to defer maintenance or cut essential services. The AHA cited an example where a standard policy offering $5 million in extra coverage rose almost 250%—from about $19,000 to more than $68,000—even though nothing had changed.

Housing providers reported that paying for insurance eats into their operating budget, forcing difficult trade-offs. Enterprise Community Partners cited a statistic that about 57% of the owners of 428 affordable housing developments spent more in operating costs than they netted in operating income, leading to average losses of $75,000 per building.

Aside from premium costs, the current system makes renters and low-income homeowners financially vulnerable in other ways. For example, the Federal Reserve Bank of Dallas found a direct correlation between rising insurance and increased mortgage delinquencies and defaults in areas damaged by climate events.

Representatives from the insurance industry and their allies blamed inflation, severe weather, and the New York legal system for soaring premiums. Dr. Robert Hartwig, a professor of finance from the University of South Carolina’s Darla Moore School of Business, identified four principal factors driving up cost: inflation, population growth, climate change repairs or mitigation, and abuse of the legal system.

Economic pressures and climate risk

The American Property Casualty Insurance Association pointed to three similar factors increasing insurance losses: macroeconomic pressures, climate change, and legal system abuse and regulatory costs. The cost of reinsurance—insurance for insurance companies—almost doubled since 2017. The cost of reinsuring catastrophe risk for property policies increased 35% nationally for July 2023 renewals, DFS said.

The state is vulnerable to damage from cyclones, flooding, and winter emergencies, and this more frequent severe weather also inflates costs. The National Oceanic and Atmospheric Administration’s Billion-Dollar Disaster database showed that New York had 31 billion-dollar disasters between 2020 and 2024, nearly triple the long-term average of 2.1 per year from 1980.

In 2012, Hurricane Sandy caused $19 billion in damage statewide, and Hurricane Ida in 2021 caused up to $9 billion in flood damage. One APCIA model suggested that a major hurricane hitting the New York metropolitan area would cost insurers over $100 billion.

Nationally, the price of construction materials rose 44% and the price of labor rose 39% over the five years ending in June 2025, outpacing average U.S. inflation. Insurers raise premiums to pay for materials and labor, so those costs rise together when businesses pass on their losses to consumers rather than cut into dividends.

The inflated cost of repairing and rebuilding homes drives losses in, for example, New York City. It’s the most expensive place in the U.S. and in the world for construction, according to APCIA’s Robert Gordon, with an average cost of $5,723 per square meter in 2024.

Legal and regulatory environment

Several insurance industry groups called New York’s legal environment a significant threat to market stability. APCIA noted that NYC has the second-highest litigation costs per capita in the nation. New York also ranks second nationally per capita for nuclear verdicts, high-dollar amounts awarded in personal injury lawsuits. The median nuclear verdict in New York is $20 million.

And third-party litigation funding involves external financiers (like hedge funds) bankrolling a plaintiff’s case in exchange for a portion of the money awarded by the court. It’s a process that makes litigation and insurance claims more expensive. Indeed, the American Tort Reform Association called NYC the No. 2 “judicial hellhole” in the nation.

The Lawsuit Reform Alliance of New York explained that lawsuit abuse costs taxpayers $22 billion annually. LRANY Executive Director Tom Stebbins detailed the inner workings of some fraud schemes, arguing that lawyers have clients fake injuries to get exaggerated or false medical diagnoses from medical specialists who are in on the scheme.

He said that claimants are often “left with minimal compensation and sometimes lifelong injuries.” Stebbins warned that such lawsuits aggravate unaffordability by driving up housing and building costs because, “Developers are increasingly hesitant to take on new projects due to the cost of liability insurance.”

The New York Insurance Association argued that, while New York homeowners largely had coverage, the price of litigation both nationally and statewide is rising faster than the cost of insurance for climate mitigation or repair. The total price tag of all civil lawsuit expenses statewide averages over $7,000 for each family in New York, ranking second in the U.S.

The 1885 Scaffold Law, Labor Law §240, imposes absolute liability on property owners and contractors for “gravity-related injuries”—like falls from scaffolding or ladders—even if the injured worker is largely at fault. Under absolute liability, the owner is legally responsible regardless. LRANY argued that this system encourages fraud.

Pressed for hard data on the percentage of fraudulent claims by Skoufis, insurance industry panelists admitted they couldn’t provide specific numbers. The senator challenged the industry narrative, asking why insurers settle so many fraudulent cases rather than taking them to verdict.

According to the LRANY, claims related to the Scaffold Law rose even as the actual rate of injuries dropped. And according to the NYAA, among property owners who had video evidence disproving a slip-and-fall claim, 70% nonetheless had their insurance settle because it would be more expensive to fight in court.

The Professional Insurance Agents of NY claimed that the DFS review process for requests by insurers to change premiums takes an average of 233 days, the second longest in the nation. According to the insurance industry representatives, that regulatory delay also makes it harder for carriers to work quickly and accurately.

Housing and consumer advocates blame insurers

Consumer Reports highlighted data showing that New York homeowners, on average, have faced over $1,000 in premium increases since 2020. Affordable housing and consumer groups said that the insurers themselves—driven by a lack of transparency, discriminatory practices, and an unwillingness to honor coverage promises—are primarily at fault.

CR and other housing advocates argued that insurance providers hide the real reasons behind rate increases. The New York State Trial Lawyers Association made the case that it’s impossible for the state government to fix or regulate pricing decisions, claims, or payments that are hidden.

Affordable housing providers also reported discriminatory coverage denials based on income, housing vouchers, or the property’s very status as affordable housing. LeadingAge New York, an organization representing nonprofit senior housing providers, said their members’ properties often get misclassified as higher liability “health” settings rather than real estate settings because of resident assistants or installed services like emergency notification systems. Such misclassifications drive costs and pressures housing operators to remove these necessary inclusions for their older residents.

New York State Rural Advocates described coverage being denied or canceled because the property is in a rural area, the affordable housing is the wrong type, or the tenants are on Section 8. They said that sometimes coverage disappeared without the owner getting a chance to correct even simple issues like a missing handrail.

This despite the 2024 Executive Budget banning discriminating against affordable housing in insurance premiums and coverage decisions. And, despite property owners investing in fire suppression or leak detection, providers reported that insurers rarely give credit for those investments by lowering premiums.

The NYSTLA also called “illusory insurance” a major driver of market imbalance. That’s coverage that looks real but offers few real protections because of broad exclusions or difficult claim conditions. They want New York to enact a strong “bad-faith” law to punish insurers who wrongly delay or deny claims.

Solutions from insurers and industry groups

Insurance industry and regulator testimony repeatedly pointed to mitigation efforts as a key solution to lower claims and ultimately reduce premiums.

The insurance industry advocated for modernizing the Scaffold Law by instituting a comparative negligence standard. Comparative negligence means compensation would be reduced if worker was at fault for their own injury. They also pushed for legislation to upgrade the crime of staging a construction accident from a misdemeanor to a felony.

They support S5321, legislation that would let DFS hire outside consultants, making it faster to process and review rate filings. They also suggested state-backed grants, low-interest loans, or tax credits to encourage property owners to invest in resiliency upgrades like storm-resistant materials.

Solutions from housing and consumer groups

In response to market shortcomings, advocates proposed bold structural interventions aimed at forcing market participation and ensuring financial relief. Housing advocates want financial backstops. They repeatedly called for a state-backed reinsurance backstop or a reserve managed or subsidized by the state for affordable housing. This would help cover major losses, cutting back the risk to private insurers while making insurance rates more predictable.

In the interest of transparency and data fidelity, several groups—including NYHC and the Supportive Housing Network of New York—backed legislation like S8583A/A9016. It would require that DFS and New York State Homes and Community Renewal Awards publish annual reports on insurance premiums, availability, and non-renewals for multifamily housing statewide. HCR is the state’s housing agency.

They’re also pushing for real enforcement of Insurance Law §3462, which was supposed to ban discrimination based on a property’s affordability status or a tenant’s income level. Plus, they supported a specific targeted carveout from the Scaffold Law’s absolute liability standard for affordable housing projects.

They also want mandatory disclosures of third-party litigation funding to courts and opposing parties. New York passed legislation in June to regulate TPLF, S1104A/A804C. Even if it were signed by Governor Kathy Hochul today, it didn’t require public disclosures, according to Andrew Finkelstein from NYSTLA, which prevents regulators from tracking costs accurately.

The Center for NYC Neighborhoods supported legislation like the Insuring our Communities Act S186A/A3842A to make insurers stop investing in and underwriting the fossil fuel industry. It would amend New York’s community reinvestment law to apply to property insurance companies, requiring them to meet the insurance needs of the entire community and disclose coverage data by census block.

Dave Jones—Director of the Climate Risk Initiative at UC Berkeley and former California Insurance Commissioner—testified that the insurance industry fuels its own losses by investing billions in the very oil and gas projects driving the climate change that destabilizes the housing market.

NYHC also advocated for an Affordable Housing Insurance Relief Fund (S7939/A7828A) to provide emergency grants for projects with costs rising faster than funding.

Carlina Rivera, President of the New York State Association for Affordable Housing, proposed a “Safe Housing Incentive Program.” She described it as “defensive driving for housing,” requiring insurers to offer discounts to buildings that train tenants on fire safety, leak prevention, and other risk-reduction behaviors.

CR introduced a Homeowners Insurance Bill of Rights to address some of the issues on the table and asked lawmakers to legislate specific consumer rights. They include clear, plain-language explanation of coverage and the risk factors used to set rates, meaningful incentives for weather upgrades, and protection from cancellation during a state of emergency. According to CR, homeowners often fear shopping around for better rates because the state lets insurers cancel a policy within 30 days, creating a risk that they’ll end up uninsured altogether.