Facts and Fundamentals: What the Insurance Affordability Debate is Missing

A new congressional inquiry claims that insurers are failing consumers on a massive scale, citing a startling statistic: more than 44% of homeowners insurance claims and 45% of auto liability claims closed without payment in 2025. Senators Elizabeth Warren (D-MA) and Josh Hawley (R-MO) point to those figures, alongside recent insurer profits, as proof of a broken system. But the number itself proves nothing of the sort: a claim closed without payment is not the same as a claim wrongfully denied, and the senators' own request for insurers to break the data into categories concedes as much. 

Consumers deserve fair treatment, timely payment of valid claims, and clear information about their coverage. Yet the suggestion that rising premiums, claims closed without payment, and recent profits add up to widespread insurer misconduct paints a factually inaccurate picture of how insurance works. Separating the headline from the underlying reality requires a closer look at each claim. 

Myth: Nearly half of insurance claims are being denied. 

Fact: Claims closed without payment are not the same as claims wrongfully denied. 

The senators cite reporting that the five largest homeowners’ insurers closed more than 44% of resolved claims without payment in 2025. The corresponding figure for auto liability and medical claims was 45%. Those figures sound alarming, but what do they mean?  

In layman’s terms, the stat is based upon denial of any claim filed, regardless of the reason why.  Naturally, some of these will not be approved, and for good reason. Claims can be closed when reported damage falls below a deductible, the loss is excluded from coverage, or the policyholder withdraws the claim. In auto insurance, another carrier may ultimately pay. 

A claim closed without payment does not, by itself, establish that an insurer improperly denied coverage.  

Insurers are also subject to extensive state-based regulatory oversight, including market conduct examinations that review claims-handling practices.  The senators themselves acknowledge the different reasons claims may close without payment and have asked insurers to break out those categories. Treating all claims closed without payment as evidence of wrongdoing risks misleading consumers and obscuring the facts. 

It is the equivalent of simply listing a teenager’s complaints about their parents in full, with zero analysis, corresponding reaction or allowance for error (unintended or not).    

Myth: Rising premiums are primarily about insurer profits. 

Fact: The cost of providing insurance has increased substantially, and consumers are feeling the effects. 

Insurance premiums reflect the costs and risks associated with providing coverage. When those costs increase, premiums face upward pressure. The U.S. Chamber of Commerce’s 2025 report, The Path to Affordability and Availability in Homeowners Insurance⁠, examines the factors contributing to rising costs. 

From January 2020 through December 2023, construction material costs rose 40.9%, compared with 19.2% for overall consumer prices. Residential construction trade services increased 34.1% over the same period. The cost of replacing a damaged roof or rebuilding a house has risen much faster than many other household expenses.  

At the same time, more homes and higher-value property are concentrated in areas exposed to hurricanes, wildfires, and severe storms. Losses from catastrophes, reinsurance expenses, and costly litigation place additional pressure on premiums. Those factors vary across states, which helps explain why insurance affordability problems are especially acute in certain markets. 

These costs ultimately affect the price of coverage. It is difficult to have a credible discussion about insurance affordability while overlooking the actual costs of repairing homes, replacing property, and protecting communities against increasingly expensive losses. 

Myth: Recent insurer profits tell the whole story. 

Fact: Insurance profitability must be evaluated over time, including the years when insurers lose money. 

Recent headlines have highlighted strong insurance industry profits. What receives considerably less attention is the financial performance that preceded them. According to AM Best⁠, the U.S. homeowners insurance segment recorded a $16.5 billion underwriting profit in 2025, following a $1.3 billion underwriting loss in 2024. The industry experienced underwriting losses in seven of the eight years from 2017 through 2024. 

The turnaround reflects higher premiums that better match risk, improved underwriting, and a comparatively mild catastrophe year. Ultimately, insurers must maintain adequate capital to cover losses during major disasters and remain financially strong enough to pay claims when policyholders need them most. 

Myth: More restrictive insurance pricing will solve the affordability problem. 

Fact: Policies that prevent insurers from accurately pricing risk can reduce competition and make coverage harder to obtain. 

When approved rates fail to keep pace with the expected cost of claims, insurers may stop writing new policies or pull back from particular markets.   

The Chamber’s research examines California, where longstanding restrictions on pricing contributed to market disruption alongside significant wildfire exposure. It also examines Florida, where reforms targeting legal system abuse and the residual market helped encourage private insurers to return. These reforms address the costs and risks underlying insurance premiums rather than simply attempting to control their price. 

Focus on Solutions, Not Headlines 

A press release built around a misread statistic might generate a hearing clip, but it won't lower a single premium. Americans should be able to trust that their insurance will respond when they suffer a covered loss, and that trust is earned through sound regulation and financially stable insurers, not through congressional inquiries built on incomplete data. 

If Senators Warren and Hawley are serious about affordability, the path forward is clear, and it isn't more scrutiny of claims statistics that both of them admit need further context. It's addressing the actual cost drivers: strengthening disaster mitigation and resilience, curbing costly litigation abuse, and advancing regulatory reforms that let markets function instead of forcing insurers out of them. California shows what happens when politics overrides pricing. Florida shows what happens when it doesn't. Congress doesn't need a new investigation to find the answer; it just needs to read its own data more carefully.

About the author

Alex Swindle

Alex Swindle is Director at the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness.