The ESG Initiative at the Wharton School
Feeling the pinch of high home insurance rates? It’s not getting better anytime soon
Many in Florida are finding homeowners’ insurance unaffordable, and it’s only getting worse.
In many places, including California, Colorado and Louisiana, there’s been a steep rise in the cost of homeowners’ insurance. But it’s particularly staggering in Florida, a state that already has the highest insurance costs in the nation. Many Floridians have seen insurance premiums go up by more than 40% this year.
And despite efforts by lawmakers to stabilize the market, costs are likely to keep rising.
Another inexorable factor driving up insurance costs is climate change. Sophisticated modeling by big reinsurance companies has led the industry to take a hard look at the risk in places like Florida, which is struggling with sea level rise as well as more dangerous storms. Benjamin Keys, a professor of real estate at the University of Pennsylvania, says, “What we have is a real changing landscape in insurance markets, a recognition that risks have increased in recent years. Disasters are occurring with more frequency and severity than previously forecast.”