At the New York Public Adjusters Association (NYPPA) conference yesterday, I sat in the audience as leading public adjuster Jade Bentz and attorney Jonathan Lerner tackled a topic that hit a nerve: “Pay More and Get Less.” Lerner put it plainly. He stated that insurance has become a product where policyholders pay rising premiums but receive shrinking protection. I couldn’t help thinking how right he was, and how far this problem extends beyond any one state or carrier.
I have spent my career arguing that insurance is a social contract. It is a promise of restoration when disaster strikes. Yet, over the past four decades, since I first started representing policyholders in 1985, that promise has been quietly rewritten line by line, clause by clause, exclusion by exclusion. Consumers now shoulder more risk, face narrower coverage, and battle harder to collect. The trend has been so gradual that many do not realize how dramatically the insurance ground beneath them has shifted.
The New Economics of “Less for More”
The first driver of this paradox lies in the economics of catastrophe. Lerner noted that insurers once built pricing models on relatively stable loss histories. But the past twenty years of billion-dollar hurricanes, wildfires, and convective storms have upended those models. Reinsurers, the backstop for primary carriers, have raised prices sharply for catastrophic risk. To protect their capital, insurers simply pass that cost along to consumers.
The U.S. Treasury’s Federal Insurance Office and the National Association of Insurance Commissioners (NAIC) now treat the affordability of insurance as a national problem. Their studies show average homeowner premiums climbing by double digits since 2020, while non-renewals and policy limitations rise in tandem. 1 Reinsurers such as Swiss Re and Munich Re report that catastrophe losses are not only more frequent but more severe, forcing what they call a “price–risk adjustment.” 2 The mathematics of risk may justify higher premiums, but that does not justify stripping the value out of the coverage purchased. Costs are going up while the coverage purchased is shrinking.
The Slow Erosion of Coverage
If premiums are the price of protection, coverage is the soul of it. And it is in the policy language itself that the erosion is clearest.
Water damage is a prime example. Once treated as a basic peril, Jade Bentz discussed how it is now dissected into categories: sudden discharge, repeated leakage, seepage beyond fourteen days, or backup through sewers and drains. Each sub-category comes with its own exclusions or minimal sublimits, which have changed over time to make it less likely that water damage will be covered under the policy. 3 Policyholders learn the difference only after a claim is denied, and are certainly not aware of these semantical changes reducing coverage.
Roofs have suffered the same fate. Following a wave of hail claims, many insurers rewrote replacement cost provisions to pay only for actual cash value loss. Many apply an age-based schedule that depreciates every shingle. 4 Some have introduced “cosmetic damage” exclusions, denying payment if dents or pitting do not impair function, even though they ruin appearance and reduce property value.
The list goes on. Mold coverage, once routine, was largely eliminated in the early 2000s after the Texas mold crisis, replaced by optional endorsements with token sublimits. Anti-concurrent-causation clauses, which are obscure to most policyholders, have spread to bar coverage when a covered peril (wind) and an excluded peril (flood) act together.
Matching clauses, which determine whether the insurer must replace undamaged siding or flooring for uniform appearance, have been curtailed in many states. And labor depreciation — the practice of depreciating not only building materials but also labor in actual cash value settlements — has quietly cut initial claim payments in half in some jurisdictions. 5
Each of these adjustments might appear reasonable in isolation. Together, they amount to a systemic transfer of risk from insurers back to the very people insurance was meant to protect. And insurance companies are charging much more for policies that pay much less.
The Rise of the Managed-Repair Era
Another modern phenomenon is the “option-to-repair” endorsement, popularized in Florida and creeping elsewhere. These provisions allow the insurer to take control of repairs, selecting its own contractors and dictating scope and price. In theory, this can expedite restoration. In practice, it often limits policyholders’ control over quality and creates new conflicts of interest. 6 When combined with higher deductibles and depreciated roof settlements, the insured can be left with little say and little recovery.
Regulators and Actuaries Sound the Alarm
Even traditionally conservative bodies now acknowledge the imbalance. The Society of Actuaries warns that climate-driven risk, absent reform, will make coverage “unavailable, unaffordable, or inadequate.” 7 The Consumer Federation of America documents homeowners forced to raise deductibles, drop optional endorsements, or forego insurance altogether. 8 The Insurance Research Council has developed an affordability index showing that premiums are consuming a greater share of household income. 9 What these reports reveal collectively is a structural change, not a temporary “hard market.” The market is redefining the boundaries of insurability itself. The public is questioning why they should pay for insurance that is so expensive and only partially covers rebuilding costs. Is it better to simply go bare because the insurance product is so deficient?
The Policyholder’s View from the Ground
From my vantage point, the effect is tangible. A homeowner with a slab leak discovers the loss is excluded as “repeated seepage.” A condominium files a claim for hail dents and learns that “cosmetic damage” does not qualify, and it is forced to make special assessments to pay for matching because the condominium by-laws require repairs to match. A family rebuilding after a hurricane finds that the code-upgrade allowance covers only a fraction of the required elevation costs. These are not rare events; they are the predictable result of a policy design change that reduces indemnity payments.
Public adjusters, contractors, and attorneys now spend as much time deciphering policy fine print as estimating damage. This is why the conversations at the NYPPA conference matter. Jade Bentz and Jonathan Lerner were not merely lamenting higher rates and premiums. They were diagnosing a deeper illness of an insurance marketplace that prices risk scientifically but measures fairness economically, and that apparently is not often concerned with the needs of the policyholder customer.
How We Got Here
Insurers argue, not without logic, that they must remain solvent amid mounting losses. Investment income no longer cushions underwriting deficits as it once did. Catastrophe models allow precision pricing but also embolden selective underwriting. When capital becomes scarce, insurers withdraw from marginal geographies and narrow their forms. Yet somewhere along the way, the purpose of modern replacement cost insurance, which was invented to restore policyholders to wholeness, has been overshadowed by the pursuit of profits in a very competitive environment.
The irony is that this retreat from coverage may itself undermine the industry’s long-term health. As premiums climb and payouts shrink, trust erodes. Policyholders delay repairs, under-insure, or drop coverage entirely. That moral hazard threatens the very risk pool insurers depend on.
Where We Go Next
To restore balance, regulators and legislators must look beyond pricing adequacy and address coverage adequacy. The NAIC’s current data call is a start, but transparency must extend to policy-form changes and exclusion trends. Insurers themselves should recall that solvency without service is hollow. The business of insurance is not capital management; it is human restoration and financial safety for the public.
I left the unique TWA Hotel where the NYPPA meeting occurred, reminded that while insurance markets evolve, basic principles of why insurance exists should not. Fairness, transparency, and restoration remain the cornerstones of modern insurance. We can and must build a market that honors those principles, even in an age of rising risk.
I want to applaud the NYPPA on its excellent conference. Jennifer Barrack did a wonderful job as the Executive Director. The audience was engaged, and the lessons were important.
Thought for the Day
“Fair dealing is not a principle of charity; it is a principle of justice.”
—Justice Benjamin Cardozo
1 U.S. Department of the Treasury, Federal Insurance Office (FIO), Homeowners Insurance in the U.S.: Cost, Availability, and Affordability Report (2025); National Association of Insurance Commissioners (NAIC), Affordability and Data Initiative (2023–2025).
2 Swiss Re Institute, sigma No. 5/2025: P&C Insurance in a Riskier World; Munich Re, NatCatSERVICE Annual Results 2024 (2025).
3 ISO HO-3 Form 2011; typical “continuous seepage or leakage” exclusions and sump/sewer backup endorsements.
4 ISO HO 04 93 (1999) Roof ACV Endorsement; AM Best Personal Lines Outlook (2024); industry form filings on roof age schedules.
5 United Policyholders, “Labor Depreciation Survey” (2022); IRMI, “Matching and Appearance Losses Across 50 States.”
6 Florida appellate decisions upholding managed-repair programs (2017–2023).
7 Society of Actuaries, Availability, Affordability, and Adequacy of Insurance in Climate-Risk Areas (2024).
8 Consumer Federation of America, Overburdened: The U.S. Home Insurance Affordability Crisis (2025).
9 Insurance Research Council, Homeowners Affordability Index (2023).