Insurers pull back as US climate catastrophes intensify
The insurance industry is increasingly wary of the risks presented by climate and natural disasters, prompting major firms to scale back their presence in more vulnerable states.
In June,
Those followed
In testimony before the
"Just as the
The industry is feeling the pinch beyond the East and West coasts, as well, according to
"This isn't just a story about
"Many smaller, undercapitalized insurers in
The industry, which has historically taken a more reactive approach to disasters, is shifting its strategy as such events become harder to ignore, he added.
"The industry's taking the approach now of what's called predict and prevent, meaning being proactive to address climate risk and make sure insurance coverage reflects that and make sure homes and business take preventative action," Friedlander told The Hill.
He noted that while Farmers made headlines, it's the 15th insurer to stop writing new policies in
"Insurers are in many ways the first movers" in response to trends like extreme weather and natural disasters, said Keys. "They have a significant amount of money at stake, so they're very exposed to the downside."
"The difference is in
"What that's meant is that the insurer of last resort in the state,
"There isn't an equivalent for wildfires in
Keys also noted that the decisions don't mean the insurers will never write policies or operate in the state again. Rather, he said, they should be understood as a way for insurers to negotiate, both on what they can charge in premiums and what factors they can weigh.
"It's not that [insurers] don't want to do business in your state, it's that [they] don't want to do business at the current premiums [they] can charge," he said.
In the meantime, however, none of the climate risks and natural disasters in question show any signs of letting up.
In March of this year,
On the
"Clearly insurers are looking at this predict and prevent approach and they're also addressing risk exposure and looking at where they can profitably do business," Friedlander said. "We're going to see more companies making similar decisions."
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