Senate committee hears why Arkansas homeowners insurance costs rose after 2023 storms and how regulators responded

Sen. Hill convened the Senate Insurance & Commerce Committee to review how severe 2023 weather and broader market forces have tightened the Arkansas homeowners insurance market. Insurance Commissioner Alan McClain said storm-related claims and rising replacement costs left some carriers insolvent and forced others to limit new business or leave the state.

"Property insurance premiums have been increasing significantly," McClain said, citing insurer loss ratios and the department's review. He told the committee United Home Insurance (Paragould) was taken into receivership and that Cameron Mutual and First Auto Insurance also have Arkansas policyholders in receivership, with the state's guarantee fund paying outstanding claims.

McClain and staff described bulletin 17‑23, issued after comparisons with surrounding states, which allows insurers to mandatorily apply an actual-cash-value (ACV) roof settlement endorsement at age 7 with department-approved notice and permits a separate wind/hail deductible. McClain said the department will review every insurer notice to make sure changes are "boldly noted" so consumers are not surprised.

Members pressed the department on the policy choices behind the 7‑year threshold. McClain said he surveyed roughly 22 similar states, found many allowed earlier schedules, and called 7 years a compromise intended to balance policyholder protection with insurer solvency. He also said insurers reported paying more than $489,000,000 in claims tied to the March 31 tornado event and that market-wide combined ratios have risen sharply, signaling underwriting losses.

Lawmakers asked about the Arkansas Property and Casualty Guarantee Fund; McClain said he did not have the fund balance in the hearing but that the department was not currently worried about its solvency. Committee members also asked whether consumers must sign to accept endorsements; McClain said signatures are not required but that notices must include dollar equivalents of percentage deductibles under a recently passed law to reduce confusion.

The committee recorded the department's pledge to collect more zip-code-level data through an NAIC-coordinated data call and to return with conclusions. The chair noted several insurers declined invitations to testify and warned the panel may pursue subpoenas if carriers continue to refuse further appearances.

The committee approved the prior meeting minutes by voice vote and adjourned after additional testimony from industry groups.