HomeHome InsuranceDue To The Climate Crisis, The Costs Of Home Insurance In The...

Due To The Climate Crisis, The Costs Of Home Insurance In The US ‘explode’

Going back to Pensacola was going back to his origins for Jack Hierholzer, but three years later, she considers leaving her hometown for north Florida as the cost of her homeowner’s insurance has skyrocketed from weather hazards. Since he settled in the area, the risk premium for his home insurance tripled to $6,500partly because insurers have to consider the effects of the climate crisis.

We recommend: Hunger will worsen and there will be deaths: UN

“My children were born in Pensacola and we have many friends and family,” he explained in a telephone interview with the AFP agency. But “I’m fully telecommuting, I can live anywhere as long as I have a broadband internet connection. If the going gets tough, we could move. And we will.”

Assets destroyed by natural disasters exceeded $140 billion in the United States in 2022, of which $90 billion were insured, according to data from reinsurer Munich Re. According to the insurance company, which provides insurance for insurers, 70% of the total losses are linked to damage caused by Hurricane ‘Ian’, that crossed Florida last September.

The latest report of the intergovernmental group of experts on climate evolution (GIEC) recalls that global warming “already has consequences on natural phenomena in all regions of the world”. Faced with these extreme and more regular phenomena, the cost for the insured rises progressively.

In the United States, home risk premiums rose 9% in one year, even more in some states, according to the Insurance Information Institute (III) which brings together professionals in the sector. The main cause of this phenomenon is the increase in the costs of reinsurance and construction materials. The increase in reinsurance is 30-40% in one year, according to III communications director Mark Friedlander.

“We see reinsurance costs increasing year after year and clearly weather risk is the first cause,” he explained.

Reconstruction costs, for their part, also increased 30% in the last five years, mainly due to problems in the supply chains caused by the pandemic.

At the State level, local factors appear that add to the challenges created by climate change. In California, for example, risk premiums are lower than the national average according to the III, because local governments affect the levels of increase.

This may be a good thing for homeowners, but it complicates life for insurers, who were unable to pass along the costs of, for example, wildfires, an increasingly frequent natural disaster. So, State Farm, one of the nation’s largest insurance companies, announced that it will not take on new clients in California, “due to the rapidly increasing exposure to natural catastrophes.”

In Florida, premiums increased spurred by a local law that allows customers to sue against their insurance. Hurricane costs add up. The percentage of homeowners without home insurance remains stable at 7%, according to the III. Insurance is mandatory when taking out a mortgage loan.

For Jack Hierholzer in Pensacola, his insurance costs more and more each month.

“If the prices of my insurance mean buying a new home every 12 years, it would be smarter to skip the insurance, repay the (mortgage) loan and cross my fingers” hoping that nothing happens, he reflects.

direct message

Source link

latest articles

explore more