Climate-Fueled Disasters Are Raising Insurance Rates

image via New Scientist

October 15, 2024, 6:00 PM

• •Increasingly intense hurricanes, wildfires and other climate disasters have forced these state-run backstop insurance groups into a role typically assumed by the private sector as the primary insurer within their borders.
• •Lawmakers and finance experts fear these state programs might not be able to carry that burden for much longer, looking toward the federal government to step in to deal with the rising costs of these disasters.
• •The warning signs for other state-backed insurance programs are growing. The head of California’s insurer of last resort raised alarms earlier this year that its model is becoming infeasible, which has put pressure on the state to allow private companies to more easily recoup losses.

Climate-fueled disasters are threatening state-run insurance plans that are supposed to be the last resort for homeowners who can't get coverage from the private market. Increasingly intense hurricanes, wildfires and other climate disasters have forced these so-called insurers of last resort into a role typically assumed by the private sector as the primary insurer within their borders. This has left these backstop insurers holding more risky policies for property in vulnerable locations. And lawmakers and finance experts fear these state programs might not be able to carry that burden for much longer, looking toward the federal government to step in to deal with the rising costs of these disasters.

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