Risky Business: How Climate Change is Changing Insurance Markets
Outlet: United States Senate Committee on the Budget
Wharton Prof. of Real Estate Benjamin Keys delivered a senate testimony on how climate change is affecting insurance markets.
Rising insurance costs are having a direct effect on households’ pocketbooks. Across the country, average homeowners’ insurance premiums rose by 40 percent from 2010 to 2019, the most recent data available.1 In addition, private insurers are exiting certain markets, pushing households into public “insurers of last resort.” The number of enrollees in these state-backed FAIR insurance plans rose by 29 percent between 2018 and 2021.2. With rising climate- related risks, and the rising cost of reinsurance, insurers will continue to increase premiums and exit markets, leaving homeowners with fewer choices, less protection, and more financial distress.