"If people can't get #Insurance, they can't get #mortgages."

States cap #InsurancePremiums, so insurers pull out - but the truth is that homeowners could not afford the premiums it would take for the insurers to stay. (This is why no insurer covers #flooding).

States should also not be the "insurer of last resort" because that burden - the burden that no insurance company will bear - would just fall on the taxpayer.

It's going to be a huge mess.

https://www.npr.org/2023/07/22/1186540332/how-climate-change-could-cause-a-home-insurance-meltdown

Some places had homes built there before they *became* vulnerable. But also:

"In the future, stopping development in the riskiest areas is ultimately part of the solution to rising insurance losses, experts say.

But for now, restricting development isn't popular with most politicians."

Because every new property brings in new property taxes.

https://www.npr.org/2023/07/22/1186540332/how-climate-change-could-cause-a-home-insurance-meltdown

Here is an interview with the CEO of a #Louisiana #insurance company. Of their $ 445 M loss since Katrina, 90% is covered by re-insurance (but the re-insurance premiums have skyrocketed). And Louisiana has a cap on homeowners' #premiums.

As in Florida, there is the Louisiana Citizens Insurance (where the taxpayer bears the risk).

Basically they're all just praying for a quiet #hurricane season. Meanwhile the Gulf is like a hot tub.

Sounds precarious.

https://www.audacy.com/wwl/news/local/whats-behind-skyrocketing-home-insurance-in-louisiana

The knock-on effects are far-reaching in time and space:

"UPC has not given a reason for pulling out of #Hawaii, but according to property #insurance legal blogs the company took a financial hit after #HurricaneIke hit #Texas and has struggled to bounce back."
That was in 2008.

https://www.hawaiinewsnow.com/2023/07/28/major-insurance-carrier-announces-withdrawal-state-leaving-policy-holders-dust/

And yet
"Almost 400,000 more people moved into than out of the most #flood-prone counties in 2021 and 2022. Same for counties vulnerable to #wildfires and heat.

Consumer-rights group Public Citizen says buyers deserve access to average #HomeInsurance prices by ZIP code over time, which would show where insurers believe risks are spiking and whether they’re paying inflated rates. But insurance companies have blocked such efforts, saying the information is proprietary."

https://www.bloomberg.com/news/articles/2023-07-27/homebuyers-ignore-risk-of-climate-change-insurance-meltdown

#Arkansas:

"According to QuoteWizard, there has been $59 billion worth of natural disasters statewide in the last 20 years, and now people are just cutting [#HomeInsurance coverage] where they can.

“It has gone up so high now people are just having to knock it to the bare minimum,” Kelly said.

Kelly stressed this is a dangerous game because if something does happen to these people, they’re basically out of luck."

https://www.kait8.com/2023/07/26/homeowner-insurance-rates-continue-rise-arkansas/

"Yellen said it’s necessary for FSOC to examine how these shifts may affect the wider financial system.

#FSOC, established after the global financial crisis to identify and address systemic vulnerabilities in the #US financial system, includes the heads of the Treasury Department, Federal Reserve, Federal Deposit Insurance Corp. and Securities and Exchange Commission, among other regulators."

https://fortune.com/2023/07/30/janet-yellen-protection-gap-insurance-climate-change-disasters-treasury-secretary/

"Besides the impact of #ClimateChange, land use planning in more exposed coastal and riverine areas, and urban sprawl into the wilderness, generate a hard-to-revert combination of high value exposure in higher risk environments. Protective measures need to be taken for insurance products to remain economical for such properties at high risk. It is high time to invest in more climate adaption."

https://www.swissre.com/press-release/Severe-thunderstorms-account-for-up-to-70-of-all-insured-natural-catastrophe-losses-in-first-half-of-2023-Swiss-Re-Institute-estimates/cea79f3c-6486-41a8-9c6e-09df260efe30

"Dave Burt, one of the “Big Short” investors who correctly anticipated chaos in the US #SubprimeMortgage market in the 2000s, said #InsurancPremiums for wildfire protection were just $1.5bn in 2021; damages were six times bigger. A move by insurers to close that gap could result in a drop of up to $495bn in property values, he said."

This entire article is, as it says, a "discomfort blanket", sketching out the ways various sectors can be devastated by #ClimateChange.

https://www.ft.com/content/899472a8-e5e2-4fde-bc91-7e548ba35294

"Prices for #reinsurance rose as much as 40 percent on Jan. 1 from a year earlier, according to a report by Gallagher Re, a brokerage firm that puts together reinsurance coverage deals. The price increases jolted insurers, who then made changes to where and for what they offered coverage."

This makes home insurance more expensive for all of us, even if we don't live in vulnerable places.

https://www.nytimes.com/2023/08/16/business/reinsurance-global-crises.html

" If the continuing risk of fires, hurricanes, and other weather-related disasters isn’t enough to make Americans think carefully about how and where to build a #home, perhaps the rising cost of #insurance might concentrate their mind. Yet policies at all levels of government suppress the signal that insurers are sending. "

https://www.theatlantic.com/ideas/archive/2023/08/home-insurance-costs-wildfires-floods-weather/675141/

"#HurricaneIdalia could become the costliest #CimateDisaster to hit the #US this year, analysts say, with massive implications for #insurance and risk management industries."

“The business of insuring for catastrophes used to mean exceptional, very rare events and that’s not what we’re seeing. These are much more common, so something’s got to change.”

https://www.theguardian.com/us-news/2023/aug/31/hurricane-idalia-cost-update-category-3-florida-georgia

"In the #US, the increases [in insurance premiums] are so savage that some homeowners are giving up on #insurance altogether, the Wall Street Journal reported this week. Less than one in five Floridians have #FloodProtection.

#Climate, macroeconomics and politics are besieging this corner of the financial sector."

https://www.bloomberg.com/opinion/articles/2023-08-31/climate-hurricanes-inflation-create-a-perfect-storm-for-insurers?

"At least five large #US property insurers — including #Allstate, #AmericanFamily, #Nationwide, #ErieInsurance Group and #BerkshireHathaway — have told regulators that #ExtremeWeather patterns caused by #ClimateChange have led them to stop writing coverages in some regions, exclude protections from various weather events and raise monthly #premiums and #deductibles."

https://www.washingtonpost.com/business/2023/09/03/natural-disaster-climate-insurance/

"For the billionaires and mere multimillionaires who have flocked to places like South #Florida, a five- and six-figure [#HomeInsurance] policy, while costly, won’t break the bank.

The result: an acceleration of #ClimateGentrification. Increasingly, only the affluent will be able to afford to insure themselves against the #ExtremeWeather, #floods and #wildfires on our warming planet. People of more modest means will simply be priced out, industry experts say."

https://www.bloomberg.com/news/articles/2023-09-07/ultra-wealthy-miami-homeowners-see-insurance-costs-top-600-000-a-year

"Reeling from four hurricanes in 2020 & 2021 that caused $23 billion in damage, #Louisiana is undergoing an #insurance calamity that is harming the state’s economy and even reducing its population."

“If you look at where the costs end up, some monstrous proportion of the city would be unable to reasonably afford #FloodInsurance,” said Feldbaum. “And not by a small margin, but where it's just completely beyond the average households’ ability to pay the average #premium.”

https://www.bloomberg.com/news/articles/2023-09-11/louisiana-insurance-market-in-crisis-from-climate-fueled-storms

This is now hitting the mainstream news.

"Morse said she put her house on the market for a year, but it didn't sell — a failure she ascribes to the recent rise in mortgage rates as well as her insurer withdrawing from her region. "

#HomeInsurance #ClimateChange
https://www.cbsnews.com/news/insurance-policy-california-florida-uninsurable-climate-change-first-street/

"First Street estimates that 39 million #US #homes are insured at artificially suppressed prices compared with the risk they actually face. Of those, nearly 6.8 million homes are covered by state-backed “insurer of last resort” policies.

But as the number of disasters and the related damages keep rising, they predict, the #insurance market will undergo a major adjustment and rates will surge, popping what the nonprofit calls a #ClimateInsuranceBubble."

https://www.bloomberg.com/news/articles/2023-09-20/us-home-insurance-bubble-closer-to-popping-as-climate-risks-mount

"His agency also wants to more accurately price at-risk homes and encourage residents to better harden and protect them from #wildfires, and squelch the rapid growth of #California’s FAIR plan, which, as Lara said Thursday, has become the “first resort, not last resort” for many residents."

#HomeInsurance rates will go way up in California, and especially so for vulnerable homes. I hope they keep the equity issue in mind while crafting this policy.

https://www.washingtonpost.com/climate-environment/2023/09/21/california-insurance-risks-fire-climate/

"The cost of #hurricanes has grown as more people move to coastal areas that are more at #risk from hurricanes."

The risk to growing #populations and #development in storm-prone areas “really matters,” Junge told Bloomberg. "I am not sure people are really aware of how much this is a problem."

https://themessenger.com/business/climate-change-population-growth-worsen-the-cost-of-hurricanes

Insurance does not cover all the damage:

"While #hurricanes and the recent Tropical Storm #Ophelia grab headlines due to the number of those impacted, smaller, more localized #storms are on the rise and are also causing significant damage where they land.

Tucker said the cost to clean up the trees in her yard alone was about $35,000, which her #HomeownersInsurance did not cover because the trees didn’t damage her house."

https://whyy.org/articles/climate-change-causing-more-damaging-storms-rising-insurance-rates-delaware-valley/

#ClimateChange has barely started being reflected in insurance claims and the price of #HomeInsurance.

"The prediction suggests that a sharp rise in home and property #insurance prices, which has already created an #affordability crisis for households and businesses in at-risk areas, has yet further to go."

This will contribute to
#ClimateInflation

https://www.ft.com/content/44cc0731-e863-468a-a6b7-f55e4d28e90d

" #Texas #HomeInsurance rates have increased 22% on average so far in 2023, twice the national rate. More billion-dollar disasters have occurred in Texas this year than any other year on record. "

https://www.texastribune.org/2023/11/30/texas-homeowner-insurance-climate-change-costs/

"About 3.2 million Americans have moved due to the mounting risk of flooding, the First Street Foundation said in a report that focuses on so-called "#ClimateAbandonment areas," or locations where the local population fell between 2000 and 2020 because of risks linked to #ClimateChange.

Across the U.S., nearly 36 million properties — one-quarter of all U.S. real estate — face rising #insurance prices and reduced coverage due to high climate risks."

https://www.cbsnews.com/news/climate-change-america-3-million-migrants-first-street-nature/

The couple in this story got a non-renewal on their #HomeInsurance. That crimps their property value by 17%. They got an offer for an insurance rate six times that of the old one. But also they can't sell their house as a mortgage requires home insurance.

https://www.cnbc.com/2024/02/05/what-homeowners-need-to-know-as-insurers-leave-high-risk-climate-areas.html

If their mortgage is paid off they might stay put, quietly living there without insurance. Until one day disaster hits and they find themselves without a home or a nest egg.

The uninsurable world: what climate change is costing homeowners

"Rising premiums are a de facto ‘carbon price’ on consumers as extreme weather events become more frequent."

On the growth of taxpayer-backed insurance, the risks to bank credit, and growing friction between #insurance companies wanting to make a profit and governments wanting to protect homeowners from spiraling insurance costs.

https://www.ft.com/content/ed3a1bb9-e329-4e18-89de-9db90eaadc0b

Let's connect the dots:

There is a housing crisis.
NYMBYs fight in-fill and taller housing.
Developers build in unsafe places like flood plains, wildland-urban interface places.
Housing is cheaper there.
Climate change brings floods / wildfires
That cheaper housing is more vulnerable.
It's a climate real estate bubble.

"The crash could be especially detrimental for lower-income homeowners, many of whom hold the vast majority of their net worth in their home value."

https://www.natlawreview.com/article/climate-bubble-real-estate-and-extreme-weather

In every year of the past ten years, only a third to a half of losses of extreme weather disasters was insured.

Of the majority of the losses, the uninsured part, would that hit the poor more, or the rich? </sarc>
😥

https://www.munichre.com/en/risks/natural-disasters.html

Here it starts:
Many #Florida home sellers are "#motivated"—meaning they would accept lower offers from buyers to sell quickly.

"One reason homeowners might be willing to sell despite the less than ideal market conditions is the high insurance rates in the state, which have risen dramatically in the past few years.

Home insurance in 2023 was about $6,000, according to Triple-I—the highest premium in the country."

(But not a word about climate change)

https://www.newsweek.com/florida-homeowners-desperately-trying-move-out-1874173

State “insurers of last resort” are absorbing trillions of dollars in risk.

"If Citizens faces a shortfall, it will allow insurance companies to levy a fee on every policy in [Florida]. That means anyone with property insurance would be on the hook."

US Senator Sheldon Whitehouse is investigating the possibility that a big-enough disaster on Florida’s coast might trigger a national real estate crisis, or push the state’s residual insurer to seek a federal bailout."

https://www.bloomberg.com/features/2024-home-insurance-real-estate-crisis/

"California’s plan has no more than a general idea of what it could owe, or how much it could fall short."

So states are taking on insurance on properties so risky no commercial insurance company will touch it. They do this without doing the actuarial homework, and without building up the financial reserves from which any payouts need to come. They're flying blind into a cloud of wildfire smoke, so to speak.

Will they come to the federal government for a bailout?

https://www.bloomberg.com/features/2024-home-insurance-real-estate-crisis/

I was thinking, My state can't be on this list.
Yes it is.

List of states that offer "insurance of last resort":

https://agentsync.io/blog/insurance-101/states-insurers-of-last-resort-for-property-insurance

"Desjardins Group no longer offers new mortgages for [#Quebec] properties in “0-20 year” flood zones — where there is a five per cent chance of flooding in any given year — because of what it called the rising impact of #ClimateChange."

“It should be noted that properties in the 0—20-year zone are generally uninsurable … while government insurance protects a property for a maximum of $400,000 for life,”

https://www.thefreepress.ca/national-news/quebec-lender-ending-new-mortgages-in-flood-zones-just-the-beginning-7327986

Insurers and home owners tread new ground in #Australia, with rates rising rapidly or owners foregoing insurance altogether.

"For insurers and local communities alike, it is often clear which properties are most vulnerable to flooding, and with enough investment and determination, the damage caused to homes can often be avoided.

"That's the message insurers are sending through their premiums," says Mr Hall."

https://www.abc.net.au/news/2024-03-11/mandatory-flood-cover-premiums-rising-insurance/103566224

"The total value of the U.S. #housing market is roughly $52 trillion, according to Zillow.

Across the nation, roughly $22 trillion in residential properties are at risk of "severe or extreme damage" from flooding, high winds, wildfires, heat or poor air quality, Realtor.com found."

#ExtremeWeather #HomeInsurance
https://www.cbsnews.com/news/climate-change-home-prices-housing-realtor-com/

Jerome Powell just revealed a hidden reason why #inflation is staying high: The economy is increasingly uninsurable.

Driving the increases in insurance are factors such as #ClimateChange and rising prices for car parts, experts say."

#ClimateInflation
https://finance.yahoo.com/news/jerome-powell-just-revealed-hidden-210653681.html

"One critical step to take is investment in disaster risk reduction," he says. "This can occur at the individual house level and the community level – one of the best things a community can do is try to decrease their risk of loss."

But in reality there are few funds available for low-income communities to adapt. Gourevitch highlights that there needs to be "much more" targeted government investment in reducing impacts on vulnerable communities.

https://www.bbc.com/future/article/20240311-why-climate-change-is-making-the-us-uninsurable

#ClimateBubble in housing

"Millions of houses are overvalued or possibly worthless because they lack adequate insurance against natural disasters.

At the root of this problem is a widespread refusal to acknowledge the true price of the risks involved as an increasingly hot and chaotic atmosphere supercharges disasters. It’s a mad collective delusion, like the belief in 2007 that home prices would never fall or in 2022 that ape NFTs were worth money."

https://www.bloomberg.com/opinion/articles/2024-03-21/climate-change-makes-too-many-homes-uninsurable

"One in three Australians know someone who has been forced to relocate from their homes due to an #ExtremeWeather event, and almost 85 percent are worried about the prospect of their #insurance becoming unaffordable due to worsening extreme weather events. "

https://www.newsofthearea.com.au/australians-living-in-fear-of-extreme-weather-events

This story is repeated all over the place:
Buy house
Pay $1,600 a year for home #insurance.
Last year, the rate goes up to $7,000 annually.
Or the insurer stops coverage altogether.
Even the state "insurer or last resort" charges multiples of the original cost.

This is a slow moving train wreck,
and this train is bigger than the 2008 mortgage crisis.

https://edition.cnn.com/2024/03/29/economy/home-insurance-prices-climate-change/index.html