Property insurance is expensive, and seems to get more and more pricey every year. Some might attribute rising costs to climate change or natural disasters, but look under the hood of the $1 trillion in premium payments last year — the numbers might tell a different story.To discuss what’s causing the rise in cost, “Marketplace Morning Report” host Nancy Marshall-Genzer spoke with Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator, whose latest paper, “Regulating Property Insurance as Public Utility” explores the topic. The following is an edited transcript of their conversation.Nancy Marshall-Genzer: So how profitable is the property casualty insurance industry?Brian Shearer: Well, it's very profitable. We're seeing huge spikes in profits. But in addition to that, we're seeing a kind of longer-term trend starting in the ‘90s, when the margin between what insurance companies are paying out in claims and what they're collecting in premiums started increasing. And because of that, Americans and American businesses have been paying over $100 billion extra every year.Marshall-Genzer: Can you quantify that?Shearer: So in 2024 and 2025 the profit margins of the industry doubled, and they were $150 billion — both years over $150 billion. And that's on top of all of the excess spending. Of course, they also are spending money on things like private jets, stock buybacks have been increasing. Dividends to investors have been increasing. The ad budgets have always been large and continue to be. So it's not just a story about higher profits, it's also a story about wasteful spending.Marshall-Genzer: Now, we did reach out to the trade group representing these insurers, the American Property Casualty Insurance Association, and they say they've made a profit of 6% over the past decade. And they say that's lower than the 14.9% average for most Fortune 500 companies. They say they're not price gouging. What's your response to that?Shearer: They're really not supposed to make a profit on the insurance product itself. They make their money from generating returns on the surplus fund in the stock market. So in some ways, it's better to think of insurance as an investment firm, and the insurance product as how they get their investment capital. So a return on the insurance business might seem low, but that means their cost to acquire investment capital is actually negative. The source of their capital is paying them.Marshall-Genzer: From the association's point of view, they say insurers have to make money so they have something to store away for a rainy day, for years when there are big losses. Are they right?Brian Shearer: There's a real question about whether they're actually saving the excess money. A great deal of the margin isn't going into the surplus fund. It's going to $150 billion to ad budgets and agent commissions. In 2025, Progressive spent 20% of its revenue on stock buybacks and dividends. In 2024, State Farm bought four private jets — not one, but four. And so, you know, I think we should be more sympathetic to that explanation, if the insurance industry was actually saving the money.