Climate Change
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Across the country, more intense heat, storms and fires are causing the home insurance market to start to buckle.
As climate change gets worse, the immediate effects are becoming painfully obvious: More frequent and severe storms, wildfires, hurricanes and other types of extreme weather are wreaking havoc and pushing millions of Americans out of their homes each year.
Less obvious, but arguably even more important, are the consequences of those disasters, which are threatening the foundations of modern American life even for people who aren’t affected directly by extreme weather. One of the best and most recent examples is the insurance market. Insurers are spending more to fix damaged homes as disasters intensify. In response, they’re raising rates, squeezing homeowners already struggling with rising mortgage costs, and even abandoning some markets altogether. (Read our full story here.)
(Are you having trouble with your homeowners insurance? Tell us.)
The health of the home insurance market is inextricably tied to the health of the broader economy. A broad downturn in the insurance industry could spill over into real estate values and hurt local tax revenue.
And that scenario might not be as far-fetched as it seems. “I believe we’re marching toward an uninsurable future” in many places, Dave Jones, the former insurance commissioner of California and now director of the Climate Risk Initiative at the University of California Berkeley law school, told me.
My colleague Mira Rojanasakul and I set out to learn how widespread the tumult in the insurance industry has become. We spent months talking to those who track the financial health of insurers, including companies like AM Best, a rating agency that focuses on the industry. We also spoke with state insurance commissioners, insurance executives, academics and homeowners themselves.
We found an industry facing a level of disruption that is far greater than most people know. Here are the biggest takeaways from our investigation.
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