New Yorkers are paying more for homeowners insurance. But are they subsidizing policies in other states?

New York homeowners are watching their insurance premiums climb. Meanwhile, insurance companies are making large profits in the Empire State, lawmakers say. 

So where's the money going? Are New Yorkers subsidizing other states?

Extreme weather is driving costs up

Extreme weather - from wildfires in California to hurricanes in Florida - is driving a homeowner's insurance crisis. Coverage is increasingly becoming less available and more expensive. 

"Increasing people's rates by hundreds of dollars in a given year, that hurts a lot," State Sen. James Skoufis said. "Especially in New York City, and the Hudson Valley, where I am ... it's a really, really high cost of living area of a high cost of living state." 

Earlier this year, three New York state senate committees launched an investigation into insurance rates. Skoufis says insurers are asking for rate hikes while profits remain strong. 

"The industry is doing extremely extremely well here and not so well in lot of other states," Skoufis said. "That tells me that it is likely, in one way, shape, or form, New York policyholders are subsidizing the losses in some of these other states, which obviously, as a New York policymaker, alarms me."

Are New York insurance policies subsidizing other states?

CBS News New York reviewed data from credit rating agency A.M. Best. It shows that last year New York insurance companies spent about 74 cents of every $1 premium on claims and expenses. Nationwide, companies spent 91 cents. The lower the number, the stronger the underwriting results. Looking at the raw numbers on a direct basis, before factoring in the cost of reinsurance, New York companies posted more favorable results than the national market. 

That same trend also held in 2022 and 2023, A.M. Best data shows, with insurers generating higher profit per premium dollar in New York than most other states. 

There's also no shortage of carriers, which Skoufis says is another sign the insurance business is booming in New York. 

"Over a thousand companies serving policyholders here in New York," Skoufis said. 

"There are numerous challenges in today's residential property market"

Insurance industry representatives say New York insurers don't have it so easy. 

"There are numerous challenges in today's residential property market, including the difficult litigation environment, pervasive fraud, the increase in the severity and frequency of extreme weather, aging infrastructure, and higher material costs," said Cassandra Anderson of the /New York Insurance Association. 

"Frankly, New York has been lucky. But we are going to get that next Hurricane Sandy, and that's what insurance companies have to prepare for," Robert Gordon of the American Property Casualty Insurance Association said. 

"We do look at profitability" 

New York's top insurance regulator is acting Department of Financial Services Superintendent Kaitlin Asrow. Last month, Asrow told senators her job is a balancing act: protect the bottom line of homeowners without driving insurers out. 

"We do look at profitability. We're very conscious of it, given the affordability crisis," Asrow told lawmakers in November. 

Skoufis asked her at the time if she thought rates are too high in New York. 

"I think it's on a carrier-by-carrier basis that we have to review," Asrow said. 

By law, DFS must ensure rates are not excessive, but Asrow said the state still faces major risk, with nearly eight of 10 New Yorkers living in coastal areas. 

Asrow said the agency makes sure companies are not importing out of state costs to justify hikes, but senators want DFS to have more resources and staff so that they can conduct a deeper analysis before approving rate increases. 

The state senate's report and recommendations are due early next year. 

According to the Insurance Information Institution, New York premiums are significantly lower than the national average. When you compare the cost of insurance to home values, 20 states have more efficient costs. 

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