27-01-2025
Climate change and the homeowners insurance crisis
TODAY'S STARTING POINT
We experience climate change personally and most poignantly when a cascade of events finally catches up with us. Consider this sequence:
A changing climate leads to freakier weather – storms that are more destructive and more frequent, rising seas and heavier precipitation that exacerbate flooding, heat waves that dry out vegetation, and longer droughts that make the land more vulnerable to fire.
Storms, floods, and wildfires lead to homeowners suffering vast and catastrophic damages.
Massive damages lead to insurance companies getting absolutely clobbered with many costly claims.
And all that clobbering leads to insurers pulling out of certain high-risk regions, refusing to issue or renew policies in certain areas, or increasing rates so high that some customers can't afford to pay. Some choose to take their chances and let their policies lapse.
That's where we are now.
Some insurers are already pulling out of disaster-prone states, such as Florida, highly susceptible to hurricanes and flooding. In 2023, AAA announced it would
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But it's not just in extreme-weather states that consumers are feeling the burn at the end of the cascade.
'Southern New England, the Carolinas, New Mexico and counties in the Northern Rockies, Oklahoma, and Hawaii all suffer from high non-renewal rates,' the US Senate Budget Committee said
In 2023, Massachusetts had the fifth-highest non-renewal rate for homeowners insurance in the country, behind Florida, Louisiana, North Carolina, and California. Our main issue is not wildfires, but flooding exacerbated by sea-level rise. In flood-prone areas, particularly Cape Cod and the islands, as many as one in nine policies went unrenewed, according to the
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The Senate investigation found 'a correlation between rising non-renewal rates and rising premiums,' suggesting that climate change is becoming a major pocketbook issue for many American families.
Of course, climate change is also a political issue, with Americans
'I've always felt that the thing that would drive climate response is the insurance companies,' Andrew Gottlieb, executive director of the nonprofit
Gottlieb said the Cape has been remarkably lucky, in that it has enjoyed decades without a significant hurricane, since Hurricane Bob in 1991. 'At the same time, we are extraordinarily vulnerable' due to the amount of new development on the Cape and the recent type of home building – mostly very big and very expensive.
Major weather events aside, flooding is becoming a regular Cape problem. 'There are documented cases of severe, impactful flooding on the Cape,' he said. 'And if the insurance industry was
not
paying attention, then that would be surprising.'
Surf Drive in Falmouth, for instance, a coastal road on the southern end of town, has become infamous for periodically flooding on high tides. 'Not storms,' said Gottlieb. 'It just floods.' The road and the homes on it may one day
Shoreline loss caused by more violent storms is another issue. An oceanfront Nantucket home that sold for just $200,000 six months ago was knocked down by work crews a couple of weeks ago after it was condemned
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The issue is that the waters off Cape Cod are warming faster than nearly any in the world,
'Perfect summers have grown hotter and muggier. Storms arrive violently, and more often. Occasionally, nature sends up an even more ostentatious flare: A historic home vanishes. The earth opens up and swallows a Honda Civic. A seasoned fisherman on the waters off Provincetown peers over starboard and spies an unmistakable shock of electric green: mahi-mahi, visiting from the tropics.'
Gottlieb's organization is working on salt marsh restoration projects on the Cape, which can help buffer against flooding, and the Association is a founding member of the Cape Cod Climate Change Collaborative, aimed at reducing the region's carbon footprint.
But as the Senate Budget Committee put it, 'unless the United States and the world rapidly transition to clean energy, climate-related extreme weather events will become both more frequent and more violent, resulting in ever-scarcer insurance and ever-higher premiums.'
What can residents do?
If you can afford it, move to an area less subject to natural disasters. Yes, that's disruptive, but not as disruptive as losing your house. If you are denied private insurance, 34 states (including
Of course, the only real answer is to arrest the advance of climate change. And the world isn't doing very well on that score.
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