Climate Matters: Insurance collapsing under the climate

The companies insuring against Mother Nature are finding it increasingly harder to do so in a changing climate. Bigger wildfires, stronger hurricanes, and more severe storms all put more strain on the industry protecting our property. But the future looks to hold more disasters that will cost even more money to bounce back from.

Insurance companies have been watching climate change for as long as weathermen. The trends in weather influence the trends in prices, and both are on the rise long term. Wildfires are now growing into megafires, causing insurers to flee from California and the West. More intense hurricanes are influencing a pull from the coasts. And other “secondary” threats are now adding up to a larger part of the sum.

Earthquakes and hurricanes have long ruled as the major expensive disasters that force insurers to rally and respond en masse. But other lower-impact events are now occurring so rapidly that they can be just as costly.

Just last year, Missouri recorded its highest number of billion-dollar disasters in a year at 11, and this flipped the insurance script. Homeowner’s insurance had been fairly profitable in the state over the last decade until it all sank under the weight of the storms. Missouri homeowner’s insurance costs have now increased over 20% to offset these losses, and this is a trend felt nationwide.