The ESG Initiative at the Wharton School


Climate change is causing more damaging ‘mid-size’ storms. Insurers are taking notice

Outlet: WHYY

Storm damage is on the rise. Here’s what that means for homeowners in the Delaware Valley.

Recent decisions by some insurers in Florida and California to stop providing homeowners coverage in those states raises fears about how the industry will respond to climate change.

“So insurers, their goal is to collect premiums and to pay out claims that are less than those premiums,” said Ben Keys, a professor of real estate and finance at the University of Pennsylvania’s Wharton School. “And so when an insurer is not seeing profitable opportunities, they are going to raise their premiums, they’re going to cut their coverage, or they’re going to leave and stop writing policies.”

While experts say Florida and California have unique factors and regulations that don’t exist in Pennsylvania, New Jersey, or Delaware, Keys said current and future homeowners should still pay attention to what the insurance industry is doing.

“I think of insurance as being one of the very first movers in a much longer chain of responses to climate risk,” he said. “They are the most mobile and have the most money at stake in the event of disasters.”