Energy vs Climate
Introducing Climate Now: When insurers can no longer afford the risk
Aug 20, 2024
The discussion reveals how climate change is reshaping the insurance industry, particularly through rising premiums and changing risk assessments. Experts delve into the ongoing struggles in high-risk areas like Florida and California, where traditional insurance models falter. Literary connections highlight historical perspectives on contemporary climate challenges, showing societal dynamics at play. The episode weaves in themes of deception and nostalgia, shedding light on the complexities facing insurers and homeowners in a changing climate.
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Quick takeaways
- The increasing frequency of extreme weather events is forcing insurers to raise rates or withdraw coverage, particularly in high-risk areas.
- Regulatory limitations on using predictive climate models hinder the insurance industry's ability to accurately price policies amidst escalating climate risks.
Deep dives
The Insurance Industry's Response to Climate Risks
The insurance industry faces significant challenges due to the increasing frequency and severity of extreme weather events driven by climate change. In 2022, damages from extreme weather events amounted to over $165 billion, prompting insurers to raise rates or withdraw coverage in high-risk areas. For example, in California, the dramatic rise in wildfire-related damages led major insurers like State Farm to cease offering new homeowner policies altogether. This shift in the insurance landscape indicates a critical need for the industry to adapt to a changing climate, as traditional models of risk assessment become insufficient.
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