Page 38 - Insurance Times November 2023

From

Boardrooms

to Bedrooms Continues to pursue his passion of exploring,
Praveen Gupta

learning and sharing from the exciting inter-
sections between Climate Crisis, Diversity,
Governance, Risk and Tech. He essays his
passionate views through his blog:
www.thediversityblog.com.

The US continues to see spiralling insured and economic losses as a result of the climate crisis. A
billion-dollar loss now occurs less than every 20 days. It could be a hurricane, wildfire, flooding,
heatwave, or drought. Let’s look at some of the lessons and outcomes courtesy, of what’s happening
on the homeowners’ front.

Praveen Gupta’s commentary - for The Journal, Chartered Home insurance hogs the most limelight. Damages, rising
Insurance Institute - analyses the impact of Climate Crisis insurance cost and supply side challenges have not only made
on homeowners insurance in America, during a recent visit. it an emotive issue but have brought climate change debate
to people’s bedrooms. California has become the flashpoint
The US now experiences $1 billion climate related for an insurance crisis fuelled by wildfires.
catastrophe in less than every 20 days. A growing portfolio
of 40 million insured homes is witnessing jump in premiums State Farm and Allstate Insurance recently stopped writing
new property and casualty coverage for homeowners in the
from the escalating losses. While some wildfire, flood and
state. The California Department of Insurance, the state’s
hurricane prone regions are becoming uninsurable, in some
such cases properties are becoming worthless. regulator, is being lobbied by carriers to allow increases in
premiums. The state's consumer protection laws forbid
carriers from using catastrophe models to determine the risk
Treasury Secretary Janet Yellen sounded the alarm bell:
In 2020, she says, just 60% of the $165 billion in total of wildfire, and therefore how that can factor into premium
rates.
economic losses from climate-related disasters were
covered by insurance. She believes it is necessary for the
According to Bankrate, the national average for home
Financial Stability Oversight Council (#FSOC) to examine how
these shifts may affect the wider financial system. insurance based on an annual policy that offers dwelling
coverage of up to $250,000 soared 20% this year to $1,428.
The higher premiums – which have been blamed on factors
The US continues to see spiralling insured and economic
losses as a result of the climate crisis. A billion-dollar loss ranging from inflation spiking the cost of materials and labor
now occurs less than every 20 days. It could be a hurricane, to climate change – are at the root of why some 12% of US
wildfire, flooding, heatwave, or drought. Let’s look at some homeowners decline to buy insurance, according to the Wall
of the lessons and outcomes courtesy, of what’s happening Street Journal.
on the homeowners’ front. “The report shows that actuarially sound pricing is going to

34 November 2023 The Insurance Times