When it comes to the climate emergency, insurers take a no-nonsense approach
State Farm, the largest insurance company in the United States, has just announced that it will no longer accept new home insurance policies in California, mainly due to the high incidence of fires resulting from the increase in temperatures created by the climate emergency.
The company says that the exposure of real estate in the Golden State exceeds its risk standards and prevents it from doing business based on acceptable profitability criteria. The decision is due to historic increases in construction costs (more than 30% since before the pandemic) that exceed inflation, the aforementioned rapidly growing catastrophe exposure, and an increasingly complicated and challenging reinsurance market.
Another large US insurer, AIG, decided January to pull out of California due to the high loss ratio, which puts property owners in the state in an increasingly uncompetitive market, with higher and higher premiums, but also requiring them to be insured.
The relationship between the climate emergency and fires, floods and natural disasters could is well documented: California suffers thousands of wildfires every year, and lately their frequency and intensity have been accelerated as vegetation dries out, becomes more combustible, and is accelerated by strong winds that fan…
