Will climate disasters tip the US into a new financial crisis? The litany of natural phenomena linked to climate change is disrupting home insurance practices in the affected areas, the New York Times reports on Wednesday, May 31, 2023. Some companies no longer hesitate to cut back.
California’s largest insurance company, State Farm, will no longer write homeowner’s insurance in the state. Only those affiliated before May 27 will continue to receive security. The company claimed “rapidly increasing exposure to disasters“. In recent years, the state of California has been consumed by several wildfires. Entire areas have been evacuated and in 2017 more than 40 people died in fires, L’Express reported at the time.
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“Risk has a price”
It is not the only state exposed to climatic events of pronounced intensity. In the summer of 2022, Kentucky, located in the eastern United States, was hit by floods that ranked among the most severe in its history. If the insurance companies have not neglected the owners, the prices have quadrupled, making the latter less and less solvent.
“Risk has a price,” pointed out the New York Times’ Toy Wright, former chief insurance officer at the Federal Emergency Management Agency, now in charge of the Insurance Institute for Business and Home Security.
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Florida could be the laboratory for the effects caused by the withdrawal of large insurance companies. Homeowners are struggling to get storm insurance as most businesses have left the area. Only small private insurance companies have been established, whose prices are still prohibitive.
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Despite federal measures, insurance costs continue to explode. According to the authorities, taking out home insurance will require you to pay $1,808 compared to $888 today. The government is also trying to limit losses. At the same time, he will counteract the failure of the insurance market. A delicate operation, while the risks will increase further due to climate change.
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