Climate Change is Destabilizing Insurance Industry
Outlet: Scientific American
Benjamin Keys, a professor of real estate and finance at the University of Pennsylvania’s Wharton business school, testified in front of the Senate Budget Committee on the growing risks from climate change and rising reinsurance costs.
The hearing did not address the federal budget and instead highlighted the various ways climate change is hurting property insurers and triggering dangerous growth in state-run insurance plans — sometimes called FAIR plans — that cover people who cannot buy insurance from a company.
Although the hearing covered familiar themes, it occurred at an opportune moment. Major hurricanes and wildfires have driven insurance markets into crisis in Florida, Louisiana, California and are weakening insurers in other Western states such as Colorado and Oregon (Climatewire, Dec. 23, 2022).
Growing risks from climate change and rising reinsurance costs have caused insurers to raise premiums and pull out of markets, “leaving homeowners with fewer choices, less protection, and more financial distress,” Keys said.