Policy Pulse: Insure Our Communities Act

Introduction

The home insurance market is in turmoil. Premiums are rising faster than households can absorb, carriers are retreating from high-risk markets, and the industry continues to pour hundreds of billions into fossil fuel projects, accelerating the climate disasters behind those costs. In the last five years, nearly 500,000 homeowners have dropped their property insurance because they can no longer afford it. Brooklyn apartment buildings with 50 or more units saw premiums double between 2020 and 2023, while Long Island homeowners have watched annual policies climb from $3,500 to over $14,000 — leaving 80 percent of homes in Suffolk County underinsured against extreme weather. Statewide, home insurance rates have risen by roughly 19 percent since 2019. This increase includes a 6.4 percent spike in 2023, which forced many homeowners to question whether they could afford to remain insured at all and led others (about 5 percent) to drop their insurance entirely. The insurance industry, meanwhile, earned $21 billion in 2022 alone from underwriting new oil, gas, and coal projects — the very activities driving the climate conditions that are making homes increasingly costly, and in some cases impossible, to insure.

Inside the Insure Our Communities Act

In response to this compounding crisis, the New York State Legislature has before it a piece of legislation that addresses both its symptoms and its cause. The “Insure Our Communities Act” (IOCA) (Senate Bill S186A/Assembly Bill A3842A), originally introduced by Assembly Member Phara Souffrant Forrest (D-Brooklyn) and former State Senator Brad Hoylman-Sigal (D-Manhattan), would establish a comprehensive regulatory framework to curb accelerating insurance costs while targeting the industry practices driving them. The bill strengthens protections for New Yorkers facing rising premiums, coverage loss, and discriminatory practices, while taking direct aim at the insurance industry’s role in perpetuating the climate crisis. 

Central to the legislation is its confrontation of “bluelining,” a practice in which insurers and other financial institutions raise prices or withdraw coverage from communities they deem at high environmental risk — often without clear justification — effectively rendering certain neighborhoods uninsurable. Bluelining echoes the legacy of redlining, which systematically denied Black and other communities of color access to mortgages, insurance, and investment, leaving those neighborhoods both under-resourced and more exposed to climate hazards today. As insurers retreat from high-risk areas or sharply increase premiums, low-income communities and communities of color are disproportionately priced out of coverage or pushed into inferior alternatives. 

The bill addresses these disparities through a set of concrete protections: insurers would be prohibited from refusing coverage simply because a household is located in a disadvantaged community; regulators could prevent insurers from immediately dropping customers after climate disasters; and residents in communities with limited access to coverage would be guaranteed a full year’s notice before a policy is canceled, rather than the typical 60 days, providing families more time to secure alternative protection.

The legislation also expands New York’s Community Reinvestment Act to include insurance companies. Insurers would be evaluated on how well they serve low- and moderate-income communities, with poor ratings triggering limits on rate increases, additional fees, and heightened regulatory oversight. Those fees could then be redirected to support climate resilience investments in vulnerable communities.

These community protections are paired with measures targeting the structural cause of climate risk. At its core, the bill cuts off insurers’ support for fossil fuels. It would prohibit New York-regulated insurance companies from underwriting any new oil, gas, or coal projects, denying fossil fuel companies the insurance coverage they need to build new pipelines, drilling operations, or power plants. Insurers would also be required to phase out support for existing fossil fuel operations and fully divest, within five years, from companies that derive most of their revenue from fossil fuels. 

Complementing these restrictions are new transparency requirements. Insurers would be required to publicly disclose their fossil fuel investments and underwriting activities on the Department of Financial Services (DFS) website, allowing New Yorkers to see which companies continue to finance climate change and which are beginning to change course. The bill also requires DFS to study additional tools to keep insurance affordable, including premium discounts for climate-resilient upgrades and the potential creation of a public insurance option.

Proof of Concept

The use of insurance restrictions as a lever for climate policy is not without precedent, and early evidence suggests it can be effective. In recent years, major global insurers have announced restrictions on coal coverage. This shift has made coal increasingly expensive to finance with insurance rates for coal producers increasing by as much as 300 percent in some regions as the market contracted. Without adequate insurance coverage, major coal projects cannot secure financing or proceed. However, while 46 major insurers have restricted coal coverage, only 18 have applied similar restrictions to oil and gas, leaving a substantial gap in climate-aligned underwriting policy.

New York would not be pioneering this approach alone. Connecticut has advanced legislation to impose fees on insurers that underwrite fossil fuel projects and in 2021 became the first state to require insurers to align their activities with science-based emissions targets. At the international level, the European Parliament approved comprehensive rules in April 2024 requiring major corporations doing business in the EU to implement climate mitigation plans, with provisions specifically targeting coal, oil, and gas activities. 

What distinguishes New York’s IOCA is the scope of its ambition. It would establish the first explicit ban on underwriting new fossil fuel projects in the United States. As nearly all major global insurers operate in New York, the state’s regulatory authority carries outsized national and international weight. Few, if any, other states possess the same combination of market scale and regulatory infrastructure to drive industry-wide change at this magnitude. 

Conclusion

The trajectory of climate risk in New York is well-documented and worsening. A drought in 2024 sparked brushfires in Prospect Park and Queens, heat waves are becoming longer and more intense, and by 2050, coastal flooding could put $242 billion in New York City property at risk. The consequences are already registering in the insurance market: soaring premiums, shrinking coverage, and hundreds of thousands of households left uninsured and exposed.

Governor Hochul has recently proposed meaningful steps in the FY2027 Executive budget toward insurance affordability and market accountability (see our related testimony here), including: improved data transparency around insurer profitability and rate increases, expanded automatic discounts and credits for resilience measures, and a stakeholder convening process led by the Department of Financial Services. These proposals would help homeowners better navigate rising insurance costs while keeping insurance policy connected to housing stability.

The IOCA seeks to go further by addressing what drives the crisis, not just its symptoms. Where the Governor’s proposals help homeowners better navigate a volatile market, IOCA aims to change the conditions creating that volatility — by severing the financial ties between the insurance industry and the fossil fuel projects accelerating climate risk. Over time, that structural shift could help stabilize markets and slow the premium increases that are pricing households out of coverage. For homeowners navigating these changes in the near term, the statewide Homeowner Protection Program (HOPP) network, a free service connecting New Yorkers to housing counselors and legal assistance, provides an essential complement to these reforms, ensuring vulnerable households have the support they need to understand and exercise their rights.

As the bill’s original sponsor, Senator Brad Hoylman-Sigal, moves on to serve as Manhattan Borough President, this legislation is in need of new Senate champions to carry it forward. We call on legislative leaders, especially those representing climate-vulnerable communities across the state, to take up this bill and see it through. We also invite insurers to see this legislation not as a threat, but as an opportunity to build long-term trust with the communities they serve and secure their own viability in a rapidly changing climate.