By Ted Gotsch
As the nation approaches the 2026 midterm elections, a common theme across the political spectrum is affordability.
While inflation surged in the aftermath of the COVID-19 pandemic, rising prices have largely persisted and, in some cases, have been further amplified by more recent domestic and international policy decisions.
But affordability is not only an electoral issue. Across its practice areas, Academy volunteers are examining the factors driving rising insurance costs and their effects on both the industry and consumers.
Addressing Cost Pressures in P/C Insurance
Earlier this year, the Casualty Practice Council (CPC) released two issue briefs addressing homeowners’ insurance and the impact of tariffs on auto insurance. Volunteers also presented the Academy’s findings on both topics at the CAS Spring Meeting in May.
In Homeowners’ Insurance: Filling the Coverage Gap, the Homeowners’ Insurance Task Force highlights disparities between home replacement cost valuations and other property valuation methods. The brief emphasizes the importance of regulators, policymakers, and actuaries working together to educate consumers about how insurance valuations are determined.
To support that goal, the document outlines strategies insurers and regulators can use to improve consumer understanding of insurance coverage. Examples of common misconceptions surrounding flood, earthquake, and other coverages underscore the need for collaboration among insurers, regulators, and the public to promote a more transparent and accessible homeowner’s insurance market.
The brief also notes that actuaries should understand how homeowner’s insurance valuations affect both rate adequacy and rate equity. Pricing actuaries, in particular, should be familiar with how replacement costs are calculated and ensure that the underlying data is accurate. Understanding the range of coverage and deductible options available within homeowner’s insurance products is also critical to developing sound pricing assumptions.
Similarly, the Auto Insurance Committee’s issue brief, Tariffs and Their Effects on Personal Auto Insurance Costs: An Actuarial Perspective, explains how tariff volatility throughout 2025 and 2026 has created substantial economic uncertainty for both consumers and insurers. Frequent pauses, reductions, and changes in effective dates have contributed to ongoing instability across the insurance marketplace.
According to the committee, the most significant effect stems from rising costs for goods and services directly affected by tariff changes. Increased costs for imported vehicles, parts, and materials have raised the expense of purchasing and repairing both new and used automobiles. Liability insurance costs have also increased because the property damage component of coverage reflects the higher cost of repairing or replacing vehicles.
Despite the U.S. Supreme Court’s ruling earlier this year invalidating tariffs imposed under the International Emergency Economic Powers Act, uncertainty remains regarding their long-term impact, said Jeff Clinch, a member of the CPC’s Auto Insurance Committee, during a June episode of the Academy’s Actuary Voices podcast. The administration subsequently adopted a different legal basis for the tariffs, leaving their future effects unclear.
“If these tariffs remain in effect, they certainly could lead to higher costs for auto parts and contribute to ongoing supply chain volatility,” he said. “If there is more certainty and stability there—so there is less variation by country, such as our parts coming from Canada and Mexico—it will give actuaries a little more certainty as they look ahead … but you will still need to consider the historic data as well as what you are anticipating when you are making that forward-looking view.”
“The November election may still be weeks away, but the affordability concerns dominating public discussion have been building for years. The Academy’s work demonstrates its commitment to addressing the complex issues affecting consumers, policymakers, and insurers alike.”
An Actuarial Perspective on Health Care Costs
Affordability is also a major concern in health care. Susan Pantely, co-vice chairperson of the Health Practice Council (HPC), testified before the Texas House Select Committee on Health Care Affordability on May 1 regarding the underlying drivers of rising health care costs.
In her testimony, Pantely focused on actuarial considerations while explaining the factors contributing to premium increases. “Premium growth reflects rising underlying health care costs,” she stated. “The same promising and critical therapies that can represent medical progress often raise costs that are ultimately reflected in health insurance premiums.”
In addition to the written testimony that the HPC submitted for the record, the council responded to additional questions from the Select Committee in the weeks following the hearing. The HPC will also remain engaged as Texas legislators meet throughout the summer to discuss potential solutions to address the high cost of health insurance in the state. The HPC has also been working with state insurance regulators, presenting to the Health Actuarial (B) Task Force of the NAIC during recent meetings and sharing updates on cost drivers, actuarial perspectives on the U.S. Department of Health and Human Services’ annual proposed Notice of Benefits and Payment Parameters, and other resources to help state officials address the ongoing cost conundrum.
Long-term care (LTC) remains another area where affordability challenges have persisted for years. In 2025, the HPC Long-Term Care Committee published an issue brief examining the current state of the LTC market, with a particular focus on product design, the management of legacy blocks of business, and policyholder engagement.
The brief also addresses ongoing uncertainty within the market, including significant premium increases driven by rising health care costs. Standalone LTC policies have increasingly narrowed benefits to help maintain affordability. At the same time, the market has continued shifting toward combination products that include a life insurance component, addressing the “use it or lose it” concerns often associated with traditional standalone policies.
Bringing Health and Life Expertise Together
The growing integration of life insurance and LTC products has also prompted organizational enhancements within the Academy. Earlier this year, at the recommendation of the HPC and the Life Practice Council, the Academy established the Joint LTC Combination Product Task Force to address the increasing overlap between health and life insurance in these products.
The task force is intended to create an opportunity for the Academy to address the risks associated with these combination products while emphasizing the need for input from both practice areas. As the Academy seeks to support its public policy mission, this task force will incorporate the diverse experiences and perspectives associated with standalone products and the growing variety of LTC combination products that have become an area of increasing interest for state regulators and consumers.
The November election may still be weeks away, but the affordability concerns dominating public discussion have been building for years. The Academy’s work demonstrates its commitment to addressing the complex issues affecting consumers, policymakers, and insurers alike. By examining the forces driving insurance costs across multiple sectors, Academy volunteers are helping inform the conversations that will shape policy decisions well beyond Election Day.
Ted Gotsch is policy content and publications manager at the Academy.