Insurance providers are raising their premium rates or withdrawing entirely from climate-vulnerable regions, as has happened in certain neighborhoods in Piedmont.
Obtaining homeowners insurance used to be relatively easy, but as climate risk increases with more severe weather disasters, insurance providers are raising their premium rates or withdrawing from climate-vulnerable regions entirely.
Ethnic Media Services — a nonprofit that works to enhance the capacity of diverse news outlets — recently hosted a virtual national briefing to discuss the homeowner affordability crisis in climate change-vulnerable areas. Discussions were driven by a panel consisting of professionals working in the insurance industry. Ricardo Lara, California’s insurance commissioner, was among the panelists.
According to a research study conducted by the Insurance Research Council, a nonprofit group focused on public policy issues in property-casualty insurance, weather and natural hazards were the top reasons for the increase in insurance rates.
Carolyn Kousky, a panelist from the Environmental Defense Fund, an environmental nonprofit working toward climate change solutions, talked about how individuals with insurance who faced climate disasters were more likely to have a better financial recovery from the disaster when compared to those who were uninsured.
“California has an insurance crisis like nothing we’ve seen before and we need serious reforms.”
Ricardo Lara, California Insurance Commissioner
Kousky emphasized the importance of risk reduction to curb the effects of the crisis. She encouraged homeowners to make sure their homes were built to fight climate risk.
“We know how to build homes that can withstand a lot,” she said.
Lara, the insurance commissioner, seconded Kousky’s remarks and stressed the urgent need for insurance reform.
“California has an insurance crisis like nothing we’ve seen before and we need serious reforms,” Lara said.
He talked about how low-income individuals were the most affected by this by usually living in areas with the most climate risk.
Lara said he aims to fix these insurance problems by strengthening the insurance commissioner’s authority to protect consumers, holding insurance companies accountable, improving the California FAIR plan — a last resort insurance program for homeowners in high climate risk areas that are unable to secure private insurance — so that it has the coverage options people need, and having conversations with the industry.
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