…To handle massive payout events like [Hurricane] Andrew, insurance companies sell policies across different markets—historically, a hurricane wasn’t hitting Florida in the same month a wildfire wiped out a town in California. They themselves also pay for insurance, a financial instrument called reinsurance that helps distribute risk across geographic regions. Reinsurance availability remains a major driver of what insurance you can buy—and how much it costs.
But as climate change intensifies extreme weather and claims pile up, this system has been thrown into disarray. Insured losses from natural disasters in the US now routinely approach $100 billion a year, compared to $4.6 billion in 2000. As a result, the average homeowner has seen their premiums spike 21 percent since 2015. Perhaps unsurprisingly, the states most likely to have disasters—like Texas and Florida—have some of the most expensive insurance rates. That means ever more people are forgoing coverage, leaving them vulnerable and driving prices even higher as the number of people paying premiums and sharing risk shrinks.
This vicious cycle also increases reinsurers’ rates. Reinsurers globally raised prices for property insurers by 37 percent in 2023, contributing to insurance companies pulling back from risky states like California and Florida. “As events are getting bigger and more costly, that has raised the prices of reinsurance in those areas,” said Carolyn Kousky, the associate vice president for economics and policy at the Environmental Defense Fund, who studies insurance. “It’s called the hardening of the market.”
In a worst-case scenario, this all leads to a massive stranded asset problem: Premiums get so high that property values plummet, families’ investments dissipate, and banks are stuck holding what’s left.
More simply, the global process for handling life’s risks is breaking down, leaving those who can least afford it unprotected.
Yeah, let’s worry about insurance and not the climate change itself.
If the capitalists had sane priorities, we wouldn’t be in this situation. The capitalists knew what they were doing to the climate through their own experts, and not only covered it up for decades, but used their endless wealth to wage a propaganda war to discredit outside scientists who came to the same conclusions.
Humanity’s epitaph should truly be that line from that famous comic, I’d like it to be made into a skyscraper sized titanium tombstone before the end, for any passing or newly evolved sapient species to know us by the only thing that we ever cared about:
"Here lies Humanity.
Sure, we destroyed ourselves eyes wide open, but for one glorious moment in time, we created a lot of value for shareholders!"
Only every other system has been far worse for the environment. The main reason capitalism has been bad is because it created some much general wealth that people have too much money to be responsible.
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Well climate change was always going to be a crisis that was ignored until it started hitting people’s pocketbooks.
That’s not the takeaway I got from this. Opposition to climate change reform was always rooted in money. We were told the expense was unnecessary or just too much. Now we see that it’s too expensive to ignore.
That’s a good take
Won’t someone PLEASE think of the shareholders?!
Capitalism only knows how to care about money.
This is why we need a rebated carbon tax immediately. Pricing carbon emission equivalents into products is how we subtly signal to everyone along a supply chain “buy this not that”.
As an aside, “Environmental, Social, and Governance” (ESG) investment is a way to make investments that at least purport to be socially conscious. One could make the case that they are in the company’s self interest, since companies don’t exist in a vacuum. They have employees, suppliers, customers, etc. that all get hurt when any of those three causes is weakened.
Edit: The argument about the company’s self interest is important because people like CEO’s and fund managers have a fiduciary duty towards the company or wealth they manage. They must at least be able to make an argument that they believe themselves to be acting in their clients’ best financial interest.
Except it just gets passed right along to to consumers. Have to actually hit shareholders directly somehow. Tax the shares in a manner that is tied to the share and not the company.
That’s part of the point, that it gets passed to consumers. The consumer gets nudged towards lower carbon products. The rebate is there to offset the cost of the carbon tax that is baked into goods and services. It is evenly split between everyone so that people who cause fewer carbon emissions than average will see a net benefit.
It is probably the thing that will start to trigger changes in policy. Not good changes, but some changes.
For instance, the Florida State government has become the insurer of last resort for a lot homes. It may get to a point where a bad hurricane season could bankrupt the state.
It’s gonna be the first real pain a lot of people feel from climate change.
We should worry about both climate change and resilience. Yeah, there are the people who want to ignore climate change because getting off their ass and doing something about it would be inconvenient. But at the same time, it is here and severe. We need to acknowledge its effects and work to deal with the ramifications for both humans and the environment.
That means ever more people are forgoing coverage, leaving them vulnerable and driving prices even higher as the number of people paying premiums and sharing risk shrinks.
I agree with your sentiment. But this is point to focus on. Average people are getting priced out.
💀
What should I do about vehicle insurance? If I want to self insure in my state, I’ll need to have 10 or more(some states require 25 or 26) vehicles registered in my name and prove I am “financially capable” to the motor vehicle department based on their demands. I would basically be forced to be wealthy already or run my own insurance scheme in-house for family or friends, and have ownership of the vehicles, like some pseudo rental company.
Some states, like California, only require 1 vehicle and 35000 in cash in a savings account to get self insurance. Maybe I should move to another state. Rich people have so many chances not to pay these rent/subscription traps that constantly drain your income.
The jump from 4.6 billion to 100 billion in 23 years is just… mind blowing.
Exponential increase in climate disasters leads to exponential increase in costs… Yup, that tracks
(Fully agree, that’s ballistic)
How dare you agree with me on the interwebs?? /s
The premiums going up 37% seems low if the payouts went up by more than 2000%
Housing should never have been turned into an investment platform. Have we learned nothing from 2008?
Only how to gamble.
Disaster coupled with the crazy rising costs of materials and labor. What might have been a $15k roof replacement now costs $20k+ or more depending on demand and materials availability.
Just a 15 to 20K jump? Where the fuck are you living? I want to go to there.
Shingles only. Tarpaper.
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Good. Insurance is a scam and should die a horrible death.
Insurance companies and avoiding to pay what they owe for whatever reason. What an iconic duo.
Just invest money and find some friends instead. Insurance will deny your claim and force you to fight in court or fuck off when you are at your lowest.
I spent my whole life for the most part living in the midwest in the USA and I always wanted to move to a coastal state to enjoy the ocean. once I got older and I realized how bad of an idea that was when it came to safety and economics, I have grown to realize how fortunate I am to be living in the midwest with what climate change is looking to bring us.
The thunderstorms and tornados in the Midwest are going to get worse and reach farther than before. I don’t remember hearing about as many twisters touching down in Colorado as we had this year, although that could be my confirmation bias talking.
Sure, but that’s a lot easier to deal with vs hurricanes, rising water levels, and floods
You think the Midwest won’t get flooding, especially among water ways? My old insurance company has already pulled out of the Colorado market because of increased risk of hail and fire.
Coastal flooding vs lake flooding
Ask the residents along the Mississippi how less devastating it can be when it floods.
I mean I live on lake Michigan it’s not like I’m ignorant of this
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