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The climate crisis has put the economy in jeopardy with home insurance, with the real estate market being one of the hardest hit, as insurers, especially in regions hardest hit by floods and fires, are raising costs or pulling out altogether, affecting the affordability and availability of home insurance.
The home insurance policy crisis is a reflection of the alarming rise in weather and climate catastrophes in the United States, which last year broke records for frequency and cost, experts said during a briefing held by Ethnic Media Services.
Panelists noted that the serious and urgent crisis in the home insurance market is not something that should concern only homeowners, as the spillover effect is likely to be felt in the housing and mortgage markets, as well as in local economies.
California Insurance Commissioner Ricardo Lara said the Golden State is facing a home insurance crisis that has never been on such a large scale, and that calls for reform and innovation.
In this regard, he pointed out that many people cannot find insurance for their home because it is located in risk zones or places that are constantly affected, which is why the Sustainable Policy Strategy has been implemented, a series of changes that must be implemented to resolve this type of crisis.
"We have been operating with 20th century regulations for 21st century problems, that affects us in every aspect of our lives, our rules were written outside of the situation we are living now.”, Lara commented.
The Sustainable Policy Strategy, he said, seeks to strengthen the authority of the commissioner and tax authorities, with a comprehensive approach to improving the interest rate process to protect consumers.
For more information on this matter, he said that those interested can call 1 800 927 4357 or visit the websites: https://www.insurance.ca.gov/ o www.insurance-research.org.
Vickie Kilgore, assistant vice president at The Insurance Research Council, a nonprofit that focuses on public policies impacting the homeowners insurance industry, has measured rising policy costs as natural disasters have increased.
The expert explained that 8 variables have been identified in home insurance, and among those that stand out the most are natural disasters, an example of which is Florida, which has a high cost in home insurance due to the risks that the state faces in this area.
Jordan Haedtler, climate finance strategist at the Sunrise Project and Climate Cabinet, said that climate catastrophes are now factored heavily into home insurance costs, leading to significant increases in insurance costs, while many companies have had to pull out of states where the climate crisis is turning into a financial crisis.
The financial strategist expressed his concern about a scenario where insurance companies do not have the necessary resources to pay people who suffer a natural disaster or where there is so much damage at the same time that insurance companies cannot cover it.
Haedtler said 6.1 billion homeowners are uninsured and that number is expected to rise as climate change intensifies, insurance costs rise and some companies even pull out of business.
Carol Kousky, associate vice president for economics and policy at the Environmental Defense Fund, explained that the lack of insurance can increase inequality by increasing the cost of home insurance, causing many people to be unable to afford it.
Kousky stressed that the financial crisis goes hand in hand with the lack of insurance, as businesses and homes lose everything during a natural disaster and their recovery is very slow, unlike those who have insurance that gives them the solvency to revive the economy in a locality.
In addition, he added the option of transformative investments in risk reduction, which means building houses that are more resistant to extreme climate changes, since caring for and reporting houses depending on the risks they constantly face could make a difference in the cost of insurance and obtain a more affordable price.
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