State Farm profits from fossil fuels while canceling fire coverage in California | Opinion [The Sacramento Bee]

The converging crises of climate change and housing are taking a tremendous toll on ordinary Americans who find securing affordable insurance coverage against extreme weather increasingly challenging.

Insurers, however, are benefiting doubly: they’re raising rates or abandoning markets due to damage caused by climate change, while simultaneously profiting from their investments in the very fossil fuels responsible for climate change. In this high-stakes game, the industry wins, while everyday Americans bear the losses.

With more frequent and severe extreme weather events caused by climate change, we face an undeniable reality: We cannot rely on private insurance alone to protect our homes from climate change, nor should we. We must develop comprehensive policies that intertwine housing and climate needs while ensuring the course forward is dictated by the people, not just Wall Street and the insurance industry.

State Farm’s recent decision to cease providing homeowners’ insurance in California serves as a fire warning of the escalating losses induced by disasters. In states like Florida and Louisiana, an alarming trend of insurer insolvencies has led to rate hikes as high as 63%.

The climate crisis is exacerbating our housing affordability crisis. The Federal Housing Finance Agency house price index hit an all-time high in June, pushing the American dream of home-ownership further out of reach. And with homelessness on the rise, record numbers of Americans struggle to secure affordable housing, leading many to move into fire- and flood-prone areas.

Our nation needs a surge in green, affordable housing, but this conflicts with other priorities, like California’s fire risk management policy. In Orange County, for example, much of the undeveloped land is in high-risk fire zones. Ultimately, all new housing, whether affordable or market-rate, will need insurance, and difficulty obtaining coverage will sink many planned developments before they even break ground.

At the same time, insurance companies are financing and fueling carbon emissions, accumulating high-risk corporate debt from fossil fuel companies to recoup climate-change-related financial losses. This practice contributes to the climate crisis while generating private profit. According to the Washington Post, State Farm invests “more money in oil and gas ventures” than any insurance provider in the United States. As of 2019, the company held at least $30.9 billion of fossil-fuel-related investments, the Post reported.

To enact effective change, we need robust data about how insurers are responding to climate change and its extreme weather events. To this end, the Biden administration has proposed modest data collection requirements that would require insurers to provide ZIP-code-level data on their activities in certain states. These measures were met with predictable opposition from the insurance industry, but smarter data collection is only a small first step. It’s essential to not only understand how climate change is impacting insurance coverage but to do everything we can to drastically lower CO2 emissions.

While the 2022 Inflation Reduction Act promises $50 billion in support for clean energy and green retrofits to reduce home carbon emissions, it falls short of tackling affordable housing construction.

Our current system is far from sustainable. We cannot leave this critical issue in the hands of the profit-driven insurance industry. Instead, we must prioritize and act on a dual strategy that directly addresses both the housing affordability and climate resilience crises. Our collective future depends on it.

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