Back to Blog
Nfip flood maps7/25/2023 ![]() private flood insurers retreated from the market. Following the catastrophic 1927 flooding of the Mississippi River, most U.S. In a memo to agents, the company noted that “catastrophe costs are at historically high levels,” and rising prices on factors such as lumber and labor are increasing the cost of claims and driving down profitability.īut Florida’s insurance problem isn’t new. Earlier this week, a Florida news outlet reported that Farmers’ Insurance had stopped writing new property insurance policies in February. ![]() While forest fires are little threat to Florida, the Sunshine State has long dealt with a broken market for private insurance against another natural disaster: floods. For the state as a whole, there’s no cheap insurance against fires in a warming world. And when people suffer losses not covered by insurance, federal aid programs step in with taxpayer dollars to help them out. But when the price of insurance rises, fewer people obtain or renew their coverage. The FAIR Plan is funded by all insurers licensed in the state, so as costs rise, private insurers could be forced to ask all California homeowners to subsidize FAIR Plan coverage in high-risk areas. When California homeowners can’t get private insurers to cover their homes against fire, they often turn to the FAIR Plan, a state-run “ temporary safety net” meant to provide basic but expensive coverage until they can get traditional private insurance. He is a leading scholar on the nexus of urbanization, geopolitics, and global challenges, with extensive experience as a practitioner of subnational diplomacy. Ian Klaus is the founding director of Carnegie California. Allstate took a similar step last year, explaining that “the cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires, higher costs for repairing homes and higher reinsurance premiums.” State regulators had been forcing private companies to renew policies they would have liked to cancel, but insurers seem to have had enough. State Farm, California’s largest homeowner insurance company, announced last month that it will stop selling new coverage to homeowners, not just in fire zones but everywhere in the state. ![]() In California, the five largest wildfires on record have all occurred since 2018, and private insurers are no longer willing to bear the risk of future destruction. states-California, Florida, and Texas-are taking different approaches. And the different, often increasingly divergent, directions these states take will do much to influence other jurisdictions, both within the United States and beyond. But the limits of insurance are being tested, leaving behind the question of who should pick up the tab. The development of insurance for physical assets such as buildings, boats, warehouses, and commodities was among the foundational developments of modern capitalism.
0 Comments
Read More
Leave a Reply. |