Careful where you point that thing
It’s all fun and games until someone loses their beach house or their life’s savings (Axios):
Decisions by two major insurers to stop offering new homeowner’s policies in California highlight the growing portion of America that’s becoming close to uninsurable.
Why it matters: The threat of climate change-related disasters is a large factor driving up consumer costs and putting insurers out of business in parts of California, Florida, Louisiana and elsewhere.
- It is also bedeviling regulators. “I never thought I would see in my lifetime houses that are flat-out uninsurable,” says Robb Lanham, chief sales officer for insurance brokerage HUB Private Client, which works with about 500 insurers.
Driving the news: The recent moves by State Farm and Allstate to stop offering new homeowner insurance policies in California have kicked off a national conversation on insuring risk in an increasingly perilous climate.
Insurability in an age of climate change is a 50-state problem. It’s just growing more actute in California, Florida, Texas, Colorado, Louisiana and New York “as insurers are being forced to re-assess their risk tolerance as climate change leads to more common and severe extreme weather events, says Steve Bowen, chief science officer at Gallagher Re.”
Rates in Florida “are expected to rise about 43% to nearly $6,000 in 2023,” according to the Insurance Information Institute.
Worth noting: When homes become uninsurable, it makes it difficult to get a mortgage on the property.
- In some cases, insurers are revising the types of policies they offer by including deductibles that are a percentage of the home’s value, instead of a flat amount.
- Lanham says the risk of rising rates is that it’ll make areas unaffordable for certain residents and will trigger migration, causing coastal residents to move inland, for example.
No problem. Florida Gov. Ron DeSantis and Republican state legislators will just madate that “woke” insurers offer coverage anyway. Because Florida is where capitalism goes to die.