Price Controls Won’t Fix America’s Insurance Crisis

Originally published on Substack. 

America is in an insurance affordability crisis. Home and auto premiums are soaring—some up 40% or more in just two years. And instead of addressing the root causes, politicians are reaching for their favorite broken tool: price controls.

According to a Wall Street Journal report, lawmakers in states like Illinois, Louisiana, and New York are rushing to cap insurance rates as families revolt against 30%–50% increases. The story is the same across red and blue states alike. Regulators want to “protect consumers” from big insurers—but their interventions are the reason affordability collapsed in the first place.

The Real Causes Behind Rising Insurance Costs
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Let’s start with the basics. Insurance premiums reflect risk and cost. When the cost of rebuilding a home or repairing a car goes up, so do premiums. And those costs are rising not because of greed—but because of government-induced inflation, tariffs, and regulation.

• Tariffs and protectionism have driven up prices on steel, lumber, and glass—all key materials in construction and auto repair. When it costs more to rebuild, insurers must charge more.
• COVID-era restrictions disrupted supply chains and triggered cost spikes that still linger today. Many local governments locked down markets, banned elective construction, and forced insurers to pay out more for delayed claims.
• Federal overspending and a bloated Federal Reserve balance sheet of over $6.6 trillion fueled inflation, which raised costs across the economy—insurance included.
• Regulatory mandates—from state-by-state price filing rules to federal environmental and liability regulations—have made it harder for insurers to compete, innovate, or price accurately.

It’s a vicious cycle: government interference raises costs, consumers feel the squeeze, and politicians respond with even more control.

Price Controls Are the Wrong “Solution”

Price caps don’t solve affordability. They destroy it.

When California capped insurance premiums for decades, insurers left the state. Now its regulators are scrambling to approve double-digit rate hikes just to lure them back. Louisiana tried deregulating to attract more insurers—then flipped again, imposing “excessive rate” controls this year. The result? Confusion, fewer carriers, and a less stable market.

As S&P Global analyst Tim Zawacki told the Journal, “Price controls don’t lead to affordability. Ultimately, they just chase insurers out of the market.”

He’s right. You can’t legislate away risk. The only way to bring prices down is through competition, efficiency, and innovation—none of which survive when government fixes prices.

Deregulation: The Real Path to Affordability

If politicians truly cared about helping families, they’d focus on freeing the insurance market, not strangling it.

1. End protectionism. Tariffs and trade barriers raise input costs for construction and auto repair, inflating claims and premiums.
2. Streamline state regulation. America’s insurance system is a patchwork of 50 regulatory regimes, each adding compliance costs that get passed to consumers. States should reduce red tape and allow competition across borders.
3. Stop using insurers as political punching bags. Demagoguing companies for “profiteering” ignores actuarial reality—and drives them out of states entirely.
4. Cut government spending. Inflation is the ultimate premium driver. When Washington spends and borrows without restraint, every policyholder pays the price.

Trying to solve a government-caused problem with more government always fails. Affordability won’t come from mandates—it will come from markets free to adjust, compete, and innovate.

The Bigger Picture: The Housing Affordability Squeeze

This isn’t just about insurance. It’s about the broader housing affordability crisis. Rising premiums, property taxes, tariffs, and interest rates all share a common thread—too much government. From local building codes to federal trade policy, intervention has made housing less affordable for millions.

Families don’t want subsidies or price caps—they want predictability and opportunity. They want to build, buy, and insure a home without government distortions turning every step into a financial burden.

Closing Thoughts

When politicians talk about “protecting consumers,” it usually means protecting themselves from political backlash. The truth is that markets—not bureaucrats—are best at setting prices and balancing risk. If we want affordable insurance and housing, we must get government out of the way, not invite it in further.

Freedom—not force—creates prosperity. That’s as true for homeowners and drivers as it is for every sector of the economy.
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Let people prosper.