The property and casualty (P&C) insurance industry attracted undeserved negative publicity throughout 2025, blamed for making insurance—chiefly homeowners insurance—unavailable, unaffordable, or both. In numerous speeches, Sen. Sheldon Whitehouse (D-R.I.) painted a picture of gathering gloom, prognosticating insurers curtailing business in high-risk states or raising premiums to nosebleed levels. Self-styled muckraking consumer advocates wrote about “insurer greed and executive excess.” As the only think tank with a dedicated P&C insurance program, R Street presents fact-based analysis of insurance-related public policy and calls out misinformation when applicable.
Whitehouse’s argument is that climate change will be responsible for skyrocketing insurance premiums, rendering home insurance premiums unaffordable and causing a cascading parade of horribles. These include insurers pulling up stakes in certain states, paralyzing mortgage markets, and catalyzing a housing crisis, ultimately leading to a systemic financial crisis of 2008 proportions. Whitehouse said in one presentation that the average Florida homeowner pays a premium of $14,000—a number that is poised to double, triple, or even quadruple. An average premium of $56,000 for a homeowners insurance policy in Florida? Really?
The catastrophizing scenario is alarmist and based on neither reality nor facts. Estimates of Florida homeowners insurance premiums vary widely according to source. One rough but reliable way to get a check on average Floridian homeowners insurance premium is to divide the state’s total homeowner insurance premium of $18 billion by the state’s 3.8 million detached single-family homes, yielding an average premium of $4,737.
Another problem with the “sky is falling” scenario is that it is out of date. Whereas Florida insurance rates have been rising (and some Florida-focused insurers failing) for several years now, today’s market is characterized by declining insurance rates, new insurers opening for business in the state, and tort reforms hitting the brakes on a liability crisis that was well-nigh out of control. What’s more, reinsurance costs were reduced by 14.7 percent at the property catastrophe reinsurance renewal on Jan. 1, 2026.
In contrast to these hyperbolic, histrionic forecasts of an industry driven to its knees from climate change, the facts tell the real story. In 2026, R Street’s insurance work will continue to correct this messaging with fact-based analysis of insurance trends, as well as how they impact insurance buyers and providers and inform sound public policy. Other topics for 2026 include catastrophe trend analysis, availability and affordability of property insurance, public policy issues, and how legal system abuse impacts liability insurance markets.
Telling the Truth
R Street’s 2026 research agenda will include work that objectively analyzes the insurance industry’s financial position and dispels false narratives of its imminent collapse. The insurance industry is simple in its concept (the premiums of the many pay for the losses of the few) but remarkably complex in its execution. This puts pressure on us to present the issues in a way that buyers can understand and legislators can actively address.
Property Insurance
The issue of homeowners policies dominated discussions for several years prior to 2025. Many states saw rates rise faster than Consumer Price Index change as insurers struggled to break even. This is considered the “hard” phase of the market cycle, characterized by rising rates and limited capacity. But in 2025, insurers began reducing rates in line with the cyclical nature of P&C insurance, resulting in falling insurance rates and abundant capital that characterize the “soft” phase.
Fewer natural catastrophes occurred in 2025 than expected, with Hurricane Melissa as the only landfalling storm. However, Melissa was exceptionally destructive—the most severe storm to have ever struck Jamaica. A lethal flash flood in Texas took 130 lives, and the large number of EF4 and EF5 tornadoes reminded us that Mother Nature can unleash her fury at any time.
Liability Insurance
In contrast to falling property insurance rates, liability insurance rates are expected to remain high in 2026, aided and abetted by a ravenous plaintiff bar employing techniques like saturation marketing, litigation funding, and applied human psychology to exert upward pressure on courtroom awards.
Federal Public Policy
To the extent that the federal government has anything to do with public policy affecting insurance, the impact has been adverse. The administration’s unhappiness with recommendations by the Federal Emergency Management Agency (FEMA) Reform Council may hamstring its ability to deliver timely disaster assistance. At the same time, the administration has provided financial assistance for crop insurance to farmers who do not need it. Other insurance-related policy issues at the top of our list for 2026 include flood insurance reform, third-party litigation finance, and tort reform.
Kings for a Day
Here are the top three issues R Street would address if we were made kings (and queens) for a day:
- Minimizing the potential impact of catastrophes with mitigation and resiliency measures. The National Institute of Building Sciences found that each dollar spent on natural hazard mitigation and disaster preparedness saves $6 in post-disaster cleanup.
- Targeting legal system abuse reform in states whose civil litigation climate is notorious for excessive awards and continuing to explore drivers of jumbo verdicts and settlements (e.g., third-party litigation funding).
- Resist efforts by the federal government to emasculate FEMA’s ability to engage with pre-disaster resiliency projects, active disaster management, and post-disaster recovery.
Insurance intertwines with Americans’ individual finances and the broader economy in numerous ways. Such a critical industry demands sound analysis and policy recommendations, so that’s what R Street will bring you in 2026.
