Volts Climate change and insurance: a growing fustercluck
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Dec 4, 2024 Kate Gordon, CEO of California Forward and a clean energy veteran, dives into the pressing crisis facing the insurance industry due to climate change. She discusses why insurers are abandoning high-risk areas and the dire consequences for communities. The conversation highlights the challenge of inadequate coverage and potential municipal bankruptcies, stressing the need for innovative solutions and proactive policies. Gordon also touches on the importance of transparency in insurance models and fostering resilience amidst rising climate risks.
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Climate Bubble in Insurance
- The insurance industry, designed for a stable climate, faces a crisis due to progressively increasing climate risks.
- This creates a climate bubble as risk outpaces premiums, potentially leading to defaults and bankruptcies.
Precarious Homeownership
- Loss of insurance doesn't immediately trigger mortgage default, but a subsequent disaster can lead to financial ruin.
- This is especially true in America, with its limited safety net and homeownership being many people's primary asset.
Insurers of Last Resort
- State-funded "insurers of last resort" face increasing strain from climate-related claims.
- These programs ultimately rely on public funding, which may not be sustainable and could lead to government bankruptcies.