Future Uncertain

In late May, State Farm announced that it would stop offering new homeowner insurance coverage throughout the state of California, where I live. My first thought, as a State Farm customer, was personal — what would this mean for me?
 
Once assured that my existing coverage was safe, at least for now, I began pondering the bigger implications of the news. What does it mean for the state’s largest insurer to stop insuring homes in the state? Would State Farm start dropping existing customers, too? Would other insurers follow their lead?
 
State Farm’s decision caps a larger trend in the Golden State. Allstate, the state’s fourth largest property insurance provider, quietly paused offering new homeowner, condominium, and commercial insurance policies in in 2022. Chubb and American International Group stopped renewing policies for certain high value California homes last year as well. And for years, insurers have been declining to renew coverage for homeowners in regions with higher wildfire risks.
 
I can hardly blame them. The devastating economic toll of climate change has begun to come into clear view in California. We’ve had record-breaking wildfires that have razed entire communities. We’ve experienced torrential rain, and the flooding and landslides that come with it. All the while, home prices and rebuilding costs have continued to rise. Increasingly, the math just doesn’t add up for private insurance companies. As former California insurance commissioner Dave Jones told Vox, “We’re steadily marching toward an uninsurable future, not just in California but throughout the United States.”
 
That’s a problem. Because it means people across the country all of us — particularly lower-income Americans in climate-vulnerable places — could soon be at greater risk not only from the physical dangers of climate change, but also from the catastrophic economic losses that can accompany natural disasters.
 
Where do we go from here? Pricey state policies may fill in some of the coverage gaps, but in the long term, We will need to think bigger. We’ll need to increase the fire-safety of our homes. We will want to stop developing in high-risk zones. And more likely than not, we’ll have to consider fraught options like managed retreat.
 

Photo by Blue~Canoe

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