Nearly 25,000 homes and other buildings across California<\/a> have been destroyed by massive fires in the past five years. Thousands more have been badly damaged. A California Department of Insurance assessment<\/a> predicted that by 2100, an average of 77% more acres will burn every year across the state. The Washington Post<\/em> has previously reported that insurance companies \u201cmay withdraw from offering insurance<\/a>\u201d as conditions worsen.<\/p>\n<\/div>\n Insurance is getting harder to obtain throughout the Sierra Nevada region, according to Ryan Tompkins, a forester and natural resources adviser with the University of California. \u201cMany of our communities in rural, forested areas of California are experiencing not only increasing wildfire and increasing wildfire severity, but also increasing insurance problems.They\u2019re getting dropped. They\u2019re getting non-renewed. We\u2019re seeing a sort of insidious, quiet impact economically.\u201d<\/p>\n<\/div>\n The communities hit hardest \u201cmay already have a higher probability of being disadvantaged,\u201d further amplifying their economic burdens, Tompkins added. \u201cA lot of the communities that I serve are grappling with these problems firsthand. If you have a mortgage, you need an insurance as part of that agreement. If you can\u2019t get insurance, it\u2019s going to have cascading impacts.\u201d<\/p>\n A large part of the problem is that after catastrophic events, the cost of building materials to repair the damage or build new homes to replace those destroyed skyrockets. In Florida today, roofing companies routinely charge $100 for a sheet of plywood \u2014 if they can get any at all. After Hurricane Ian last year, about a dozen firms that provide homeowners insurance in Florida became insolvent, leaving hundreds of thousands of property owners scrambling for coverage.<\/p>\n The insurance business is quite simple. If a person wants to take out a mortgage to buy a home, or a state wants to borrow money to build a new airport, the people lending the money want to be sure they will be repaid if disaster strikes. No insurance, no money. The trick for insurance companies is to spread the risk across multiple loans so if one home or one airport gets destroyed by an earthquake, a flood, or a fire, the premiums from all the other properties that company insures will cover the loss with some left over.<\/p>\n There is an old expression that says the insurance business model is to sell coverage and then deny liability. Insurance companies often are their own worst enemies, as they force their policyholders to jump through hoops to get the benefits they are entitled to. No one holds onto a dollar bill tighter than an insurance company. But to be fair, they are in business to make money. If they pay out more than they bring in, that\u2019s not a sustainable business model.<\/p>\n The people who determine risk for property insurance companies are called underwriters. It\u2019s their job to know how to assess risk accurately. Otherwise, the company loses money and they are out of a job. There are no climate deniers among underwriters. They are paid to recognize risk, not take political positions.<\/p>\n You would have to be living off-grid in a remote cabin not to know that wildfires are getting more intense and more frequent in the entire Pacific Northwest, as well as Australia and western Canada<\/a>. Underwriters are not paid to be stupid and they know that risk cannot be controlled by posting libertarian rants on Twitter.<\/p>\n Behind the insurers there is a completely separate series of companies called reinsurers. They are the insurance companies who insure the insurance companies and ultimately it will be the reinsurance industry that determines where people can live as fires rage, floods happen, and sea levels continue to rise.<\/p>\n \u201cReinsurance is also getting more expensive due to the amount of losses, not just in California, but also in other states\u201d that experience tornadoes, hurricanes and other disasters, Janet Ruiz, communications director with the Insurance Information Institute, told the Washington Post<\/em>.<\/p>\n Lloyd\u2019s of London is a big player in the reinsurance industry, as is Swiss Re. These companies make a living (and a very nice living it is) by assessing risk and deciding what premiums to charge their customers to cover those risks.<\/p>\n As climate risks \u2014 ranging from wildfires<\/a>, drought, extreme precipitation and storm surge \u2014 intensify in California and throughout the country, insurance companies and government regulation will have to find a way adapt, said Noah Diffenbaugh, a climate scientist and professor at Stanford University.<\/p>\n \u201cHome insurance is a key way that people manage risk of climate-related hazards. And we\u2019re seeing that these events can be very costly both at the individual level and clearly can be very costly for insurance companies.\u201d State Farm\u2019s decision to cease offering home insurance in the most populous state shows \u201cadaptation is very difficult. What\u2019s becoming increasingly clear is that the gap between what\u2019s happening and what we\u2019re prepared for is getting wider and wider,\u201d he added<\/p>\n Lots of people say the Earth is not getting hotter but the underwriters who work for the reinsurance industry know better. You won\u2019t find any climate deniers among them. And when they say the risks are too great<\/a>, that\u2019s when the whole global economy comes crashing down. Ultimately, it is the insurance industry that will decide where we can live, not voters or politicians.<\/p>\n What should be obvious from all this is that the cost of living is ratcheting up dramatically. The dream of home ownership for many is now out of reach. People can\u2019t afford the price of homes, can\u2019t afford a mortgage to finance one, and can\u2019t pay the insurance premium needed to get a mortgage. All of that drives the cost of rents higher as well.<\/p>\n While reactionaries in the US Congress are wringing their hands in despair because the wealthiest Americans are paying too much in taxes, millions of Americans are finding they cannot afford shelter or food. Climate change will fall heaviest on those who can bear those increasing costs the least. Most students of history can see where this is leading.<\/p>\n Sign up for daily news updates from CleanTechnica<\/a> on email. Or follow us on Google News<\/a>!<\/em><\/p>\n \n <\/p>\n Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here<\/a>.<\/em> <\/p>\n I don’t like paywalls. You don’t like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong \u2014 and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it! We just don’t like paywalls, and so we’ve decided to ditch ours.<\/em> Unfortunately, the media business is still a tough, cut-throat business with tiny margins. It’s a never-ending Olympic challenge to stay above water or even perhaps \u2014 gasp<\/strong> \u2014 grow. So … Who has the most power in America? Oil companies? Political parties? Elon Musk? Nope, nope, and nope. The correct answer is insurance companies. Insurance keeps the economy humming. Every new home, school, and commercial building, every airport, farm, or sports stadium is 100% dependent on being able to get insurance. Governments rely on insurance. Industry […]<\/p>\n","protected":false},"author":1,"featured_media":516,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[],"_links":{"self":[{"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/posts\/515"}],"collection":[{"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/comments?post=515"}],"version-history":[{"count":1,"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/posts\/515\/revisions"}],"predecessor-version":[{"id":3266,"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/posts\/515\/revisions\/3266"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/media\/516"}],"wp:attachment":[{"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/media?parent=515"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/categories?post=515"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demo4.dedicatedhost247.com\/green\/wp-json\/wp\/v2\/tags?post=515"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Insurance Challenges<\/h3>\n
A Simple Business<\/h3>\n<\/div>\n
Climate Change & Insurance<\/h3>\n
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<\/a><\/span><\/p>\nThe Takeaway<\/h3>\n
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\nFormer Tesla Battery Expert Leading Lyten Into New Lithium-Sulfur Battery Era \u2014 Podcast:<\/h3>\n
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<\/a><\/center><\/p>\nWho has the most power in America? Oil companies? Political parties? Elon Musk? Nope, nope, and nope. The correct answer is insurance companies. Insurance keeps the economy humming. Every new home, school, and commercial building, every airport, farm, or sports stadium is 100% dependent on being able to get insurance. Governments rely on insurance. Industry relies on insurance. Not to put too fine a point on it, but without insurance, commerce as we know it will come to a screeching halt.<\/p>\n