A recent report from the U.S. Department of the Treasury says there is a massive increase in homes losing insurance coverage, potentially impacting millions of Americans.
"We are marching steadily to an uninsurable future," said a former California regulator, according to The Washington Post.
What's happening?
Destructive weather events are increasing in severity and frequency, no thanks to human-made pollution. The damage these disasters are causing to homes is resulting in insurance companies raising their rates or pulling coverage altogether.
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Definitely 🙁 The American home insurance industry took a $15.2 billion loss in 2023 because of payouts, per AM Best. These were reported as the worst losses in the century and more than double the previous year's.
The National Bureau of Economic Research noted insurance premiums rose by an average of 30% between 2020 and 2023. Meanwhile, a Treasury report of more than 246 million policies found nonrenewal rates were about 80% higher in the highest-risk ZIP codes than in the lowest-risk ones.
Why is home insurance important?
As homes become less insurable, they also become less marketable, resulting in drops in home prices. The Senate Budget Committee previously said that these changes in home insurance could spark a housing crisis worse than that of 2008.
A lack of insurance or soaring premiums also disproportionately impacts marginalized, low-income communities, putting them at the front lines in the riskiest areas of the country.
What's being done about home insurance rates?
"Climate change in the long term will outrun whatever is being done on the regulatory side," said Dave Jones, a previous California insurance commissioner, per the Post. "We're not going to 'rate increase' our way out of the problem."
Slowing the emission of human-made pollution to reduce the severity of extreme weather events is arguably the only real course of action available to solve the problem. On an individual basis, this can include reducing reliance on cars and looking at plant-based diets, but large-scale solutions will have a greater impact. This includes decarbonizing the electrical grid and electing representatives who promote and enforce climate-friendly policies.
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