A trio of top Democrats is launching an investigation into Demotech, a company that has been accused of inaccurately rating small property insurers who operate in disaster-prone areas.
The top Democrats on the Environment & Public Works, Finance and Banking committees are concerned that the financial rating firm — whose scores are accepted by mortgage giants Fannie Mae and Freddie Mac — has led homeowners to trust risky insurers who go insolvent when natural disasters hit. The company has defended its practices.
With climate change making natural disasters more common and more intense, it is all the more important that homeowners have insurance that can remain solvent, Sens. Sheldon Whitehouse (D-R.I.), Ron Wyden (D-Ore.) and Elizabeth Warren (D-Mass.) wrote in a recent letter to Demotech.
“As worsening climate change and related disaster events have resulted in growing losses and claims to insurance companies, the stability of the U.S. housing market increasingly depends on the credibility of insurer financial strength ratings,” the senators wrote.
