ARI SHAPIRO, HOST:
As climate change supercharges severe weather, home insurance prices are going way up. In some markets, insurers are pulling out entirely, where companies have decided that the risk of fires or storms is just too steep to keep doing business. Well, the U.S. Department of Housing and Urban Development is trying to address the problem with a summit this week, and acting HUD secretary Adrianne Todman is here to talk about it. Thanks for joining us.
ADRIANNE TODMAN: Oh, it's my pleasure.
SHAPIRO: So if an insurance company decides that everyone's home in a certain area is at high risk of burning down or blowing away, what is wrong with that company saying, you know what, this is just a gamble we're not going to be willing to take; we're out of here?
TODMAN: Well, the fact that you're asking that question is exactly why we felt the need to have this summit. Because at the end of the day, what's really happening is increased insurance costs are now impacting our general ability to provide housing affordably to Americans across the country.
So we have first-time homeowners who are unable to purchase a home because of the unexpected cost of insurance. We have some of our existing affordable housing providers, who already provide affordable housing, seeing their insurance costs go up by, you know, levels they've never seen before. And they're having to make some financial decisions about what they invest in. Do they do some of the repairs that they need to do? Do they keep the level of staffing that they have? And none of that is ever good for tenants.
SHAPIRO: Insurance prices have gone way up, but is that necessarily tied to climate change and risk? I mean, do these two things correlate closely?
TODMAN: Well, you know, we've had some of the insurance experts come and say, absolutely, that they are keenly aware of the impact that extreme weather is having on insurance costs and replacement costs as well. They're keenly aware of rebuilding in certain neighborhoods that perhaps folks should not be rebuilding in is also creating some risk that they feel is unnecessary.
So we've been able to hear from both sides, the folks who are providing affordable housing and also those individuals that represent the insurance industry. And it's been a very fruitful conversation so far. And our goal at the end of the day is to see are there areas where we can seek to improve the current condition of the impact of - insurance is having on affordability.
SHAPIRO: Climate change is real, and the impact on insurance rates is clear. But have you also seen any evidence that insurance companies may be using climate change as an excuse just to gouge homeowners and hike prices?
TODMAN: Well, I think that's - one of the pieces of conversation that came up this morning was, we don't have the data to really determine that. We don't have the data holistically or at the micro level, the neighborhood level, to know are insurers doing that. So, you know, some people will say, yes, that's exactly what they're doing. But we don't have the data yet to suggest that. And what, in fact, some of the insurers shared is that...
SHAPIRO: Can you get that data? I mean, what's it going to take to get that data?
TODMAN: Well, I think that's - that was a large part of the conversation this morning. Who has that data? Does it exist? And again, the goal of the summit is to explore all of these different avenues.
SHAPIRO: I know that you want to be a fair arbiter between parties that are sometimes at odds. But when you look at the sharply rising insurance rates, do you think, well, yeah, that accurately reflects the increasing risk from severe weather that's caused by climate change? Or do you think, this is totally disconnected from reality?
TODMAN: I will tell you that some of the stories I've heard seem rather curious.
SHAPIRO: Rather curious. That's a diplomatic phrase.
TODMAN: (Laughter) I mean, there - and again, I say that because as a - you know, at my level, data matters. And I don't necessarily want to say someone is doing something unseemly until it's demonstrated that that's what they're doing. But, you know, as I've traveled the country, I've listened to our development community. I listened to single-family homeowners. It is rather curious the level of the increase that happens even year over year.
Something else that's rather curious is where the increases are occurring. I'm hearing that - from some of our affordable housing providers that some of the insurance increase may be happening in certain types of their housing portfolio, but not all part of their housing portfolio.
SHAPIRO: So the steepest increases don't necessarily correspond to the greatest risks.
TODMAN: That is correct. And so one of the reasons why I wanted to make sure we came together today is to have, really, a first look of what the issues are with everybody who has equities in rising insurance costs at the table. You know, there's already been some healthy debate and pushback about whether or not some of these increases are truly representing risk. My goal is to have the dialogue so that we can do what we need to do with the powers we have and the perch that we have to make a difference for the American people who are counting on us.
SHAPIRO: Adrianne Todman is the acting secretary of the U.S. Department of Housing and Urban Development. Thank you for your time.
TODMAN: Thank you. Transcript provided by NPR, Copyright NPR.
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