The Reinsurance Association of America (RAA) says actual losses, not reinsurance costs, are driving increases in homeowners’ insurance premiums nationwide, disputing a federal reinsurance proposal presented at a Brookings Institution forum.
The proposal, developed under The Hamilton Project, outlines the creation of a federal reinsurer, “US Re,” intended to stabilize the homeowners’ insurance market by using federal borrowing capacity to manage severe catastrophe risks and reduce pricing volatility.
According to the Hamilton Project paper, inflation-adjusted homeowners’ insurance premiums increased by 28% between 2017 and 2024, rising from about $2,100 to $2,700. The authors attribute market strain to increasing catastrophe risk, insurer exits, and reduced availability of coverage.
The proposal argues that a federal reinsurer could address premium volatility, access constraints, and pricing pressures linked to catastrophe risk. It states that a government-backed entity could provide capital for extreme loss events at a lower and more consistent cost than private markets, while maintaining incentives for risk-based pricing.
The model envisions the federal entity offering reinsurance coverage for severe catastrophe losses, positioning it alongside private reinsurers rather than replacing them.
The RAA rejected the proposal, stating that it does not address the underlying causes of rising homeowners insurance costs.
“Rising homeowners insurance costs are hitting families across America,” said Tracey Laws, president and CEO of the RAA. “The facts demonstrate that reinsurance costs are not a driver of homeowners’ insurance premium increases nationwide. Actual losses are the primary driver of homeowners’ insurance costs, so a federal reinsurance program won’t solve this problem. In fact, it would only disproportionately shift the cost to taxpayers living in low-risk areas. If we are serious about helping American families, we must confront what’s really behind these rising costs: more frequent and severe disasters, higher rebuilding costs, building in risky areas, fraud, and rising legal costs driven by excessive lawsuits and large payouts that benefit very few - primarily entities and individuals who are secretly investing in others’ lawsuits. We must work together on meaningful solutions that will actually improve affordability and availability.”
The association said the proposal could redistribute costs without addressing factors such as catastrophe frequency, construction costs, land-use decisions, and litigation trends.
A similar position has been outlined by the American Property Casualty Insurance Association, which raised concerns that a federal backstop would not address affordability pressures tied to growing risk exposure, infrastructure gaps, and legal system costs. The group has pointed to market adjustments already underway, including pricing stabilization and changes in coverage availability.
The Hamilton Project paper identifies catastrophe risk and capital costs as central to current market dynamics. It notes that reinsurance pricing has been volatile, with catastrophe reinsurance costs rising significantly in recent years due to large losses and capital pressures.
The paper also states that reinsurance pricing cycles and capital constraints contribute to premium volatility and coverage availability, particularly in high-risk regions. It links these trends to broader economic effects, including pressure on housing markets, reduced insurance take-up, and increased reliance on public disaster assistance.
At the same time, the RAA maintains that these pressures originate from loss experience rather than reinsurance pricing itself, framing the debate around whether capital costs or underlying risk is the dominant factor.
The Hamilton proposal draws on existing public-private models, including federal and state-backed insurance mechanisms, to support its case for intervention focused on extreme loss layers. It outlines design principles such as risk-based pricing, targeting market gaps, and maintaining operational independence.
The RAA said policy responses should focus on addressing risk drivers rather than introducing a federal reinsurance structure.
The RAA represents property and casualty reinsurers operating in the United States, including licensed underwriters, intermediaries, and cross-border firms. Its membership also includes life reinsurance affiliates and insurance-linked securities fund managers involved in assuming property and casualty risks. The group represents member interests before state, federal, and international bodies.
