The U.S. home insurance industry is in turmoil. For years it has underestimated the risks posed by climate change intensified storms, wildfires, and other natural disasters. The increased costs associated with rising sea levels, powerful hurricanes, drenching rainstorms, massive wildfires, and more have pushed insurers to the limit.
According to the director of the Climate Risk Initiative at the Center for Law, Energy, and the Environment at UC Berkeley, the world is marching toward an uninsurable future. Federal Reserve Chairman Jerome Powell predicts that in 10 or 15 years, there will be regions of the country where you can’t get a mortgage because home insurance is unavailable.
Dozens of insurance companies have collapsed or have been declared insolvent in Florida, Louisiana, Texas, and California. In the period 2018-2023, insurers canceled nearly 2 million homeowner’s policies in response to rising climate risks. Premiums have skyrocketed in many places, making them unaffordable for many homeowners.
More than 30 states have created Fair Access to Insurance Requirements (FAIR) Plans, which are state-managed programs that provide a last resort homeowners insurance option. In these plans risks are distributed among multiple participating insurers.
Some analysts believe that the federal government may have to step in to prop up the precarious home insurance market, much as it did in 1968 when the National Flood Insurance Program was created. Now that the Trump administration is aggressively rolling back climate initiatives and encouraging more fossil fuel use, we are all going to have to foot the bill.
**********
Web Links
How Climate Risks Are Putting Home Insurance Out of Reach
Photo, posted May 13, 2023, courtesy of Kevin Dooley via Flickr.
Earth Wise is a production of WAMC Northeast Public Radio
Leave a Reply