Data released by the U.S. Treasury shows that home insurance premiums are rising rapidly, especially in areas vulnerable to climate-related disasters. 

What’s happening?

The U.S. Treasury’s Federal Insurance Office, the National Association of Insurance Commissioners, and state insurance regulators collaborated to create a map showing ZIP code-level data on insurance premiums, according to Insurance Business Magazine.

Over 330 private insurers and roughly 50 million homeowners insurance policies were included in the dataset.

Based on the 66-page report, average home insurance premiums increased 8.7% faster than the rate of inflation between 2018 and 2022. Those living in ZIP codes ranked in the top 20% for predicted building losses caused by climate disasters paid 82% more in premiums than homeowners in low-risk areas.

Homeowners in high-risk zones are also experiencing issues with renewing policies. Nonrenewal rates in these areas were about 80% higher than in low-risk regions.

Industry analysts also released a forecast estimating that average home insurance costs could increase by over 29% by 2054 because of climate instability. 

What do these rising insurance premiums mean?

The rising premium costs and nonrenewal rates make it harder for homeowners to obtain policies to protect their homes.

Those who are most at risk of climate disasters, such as floods, wildfires, and storms, are having the hardest time acquiring adequate insurance. When disaster strikes, these homeowners will be left to pick up the pieces on their own.

Burning harmful energy sources, such as gas, oil, and coal, releases planet-warming emissions. These cause rising temperatures that exacerbate catastrophic weather events.

The rapid loss of biodiversity is also worsening climate conditions. A wide array of flora and fauna species helps keep ecosystems in balance, which supports water security, the food supply, stable weather, and reduces disease spread. 

What’s being done to help homeowners in high-risk ZIP codes?

State-backed Fair Access to Insurance Requirements plans are designed to provide homeowners with basic insurance. However, these plans also come with high premiums and may not offer comprehensive coverage.

These plans, which are intended as a last resort, are also oversaturated due to the high nonrenewal rates that block many homeowners from private insurers.

According to Insurance Business Magazine, “this growth trajectory is unlikely to reverse in the near term.”

However, reducing water use, energy consumption, and overconsumption of food and consumer products can help slow the rate of planetary warming and reduce extreme weather events.

Everyone doing their part to be greener can make it easier for homeowners to access the insurance they need. A cooler, cleaner future means a healthier planet for everyone and lower insurance premiums.

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