A new analysis says Americans pay about $150 bn too much each year to insure homes, cars, and businesses. The Vanderbilt Policy Accelerator argues federal guardrails would cut costs for consumers facing pressure from housing, food, fuel, and other household bills, according to AP.
The analysis focuses on loss ratios, or how much insurers pay in claims for every dollar collected in premiums. In 2024, insurers reimbursed 62 cents in claims for every $1 of premiums, down from an average of 80 cents during the 1980s and 1990s.
That gap sits inside a wider political fight over affordability. Insurers say premiums have risen because homes, vehicles, repairs, labour, and catastrophe losses cost more.
Climate risk has also made pricing harder, especially in states exposed to hurricanes, wildfires, floods, and severe convective storms.
Brian Shearer, director of competition and regulatory policy at the Vanderbilt think tank and a former senior adviser at the Consumer Financial Protection Bureau, said the low loss ratios show the insurance industry charges too much.
According to Beinsure analysts, the report puts a hard number on a complaint many policyholders already feel every renewal cycle.
The insurance industry rejects that conclusion. Don Griffin, vice president for policy and research at the American Property Casualty Insurance Association, said current loss ratios reflect large financial losses in recent years and the steps insurers have taken to rebuild financial strength. He said carriers need stable funding to pay future claims.
Griffin also said loss ratios in the 1990s reached nearly unsustainable levels, driven in part by Hurricane Andrew.
After reviewing the Vanderbilt analysis, he argued state regulators remain better suited to oversee insurance than federal rules. Mandated loss ratios, he said, would hurt customers.
His warning was blunt. When governments limit insurers’ ability to price policies, markets weaken, coverage options shrink, and policyholders face higher prices. That’s the industry line, and regulators have heard it often.
The Vanderbilt analysis takes a different route. It compares what insurers collect with what they pay back to customers after accidents, natural disasters, and other losses.
By returning to an 80-cent loss ratio for every $1 collected, the report estimates households and businesses would have saved roughly $150 bn from more than $1 tn in premiums paid during 2024.
The report also includes proposed legislative language for a federal higher loss-ratio requirement. State governments currently regulate most insurance activity, but a federal mandate would give companies less room to challenge the standard across fragmented markets.
The analysis argues insurers use premium revenue for corporate perks, jets, stock buybacks, high executive pay, large dividends, advertising, and agent commissions.
We think that claim will draw heavy pushback from carriers, because it moves the debate from actuarial pricing into corporate conduct.
The affordability backdrop matters. President Donald Trump won a second term after promising to contain inflation, yet his administration has cut institutions such as the CFPB, which had looked for consumer savings in financial markets.
Average mortgage rates sit above 6%, and Trump’s executive order to increase new-home construction would take years to affect housing prices.
When Trump signed the housing regulations order in March, he said his administration would remove higher standards tied to disaster protection and energy efficiency because they raised construction costs.
Research by economists Benjamin Keys and Philip Mulder found average home insurance premiums rose 28% after inflation between 2017 and 2024, reaching an annual cost of $2,750.
Their work attributed about one-third of the increase to higher construction costs and another 20% to greater disaster risk. They also pointed to higher reinsurance costs, which insurers pay to protect themselves from catastrophic losses.
The Vanderbilt analysis does not deny higher costs across housing, autos, repairs, or reinsurance. It asks whether insurers widened the gap between premiums and claims beyond what those pressures justify.
For policyholders, the distinction isn’t academic. It shows up as a bigger renewal bill, then another one.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.