The focus of today’s commentary is about the insurance industry and the role and the consequences that the warming planet is having on the industry and how this is and will effect your daily life.  There are two principal aspects that I am going to address.  First, how climate change is impacting insurance and the implications to each of us that we will see in our premiums and coverages. Second, how the insurance industry and companies are going to be increasingly impacting the transition to a fossil free economy.

I have never understood how insurance companies can continue to provide home insurance coverage to people who choose to live on the water at sea level or on a river bank that is prone to flood over its banks.  This is especially relevant for people living on the ocean at or just above sea level.  I’ve written about this previously including an article about why wealthy people are still willing to buy or build right in these places.  The article concludes that it is because they can still buy insurance to protect them from losses.  As I have been warning, that is changing and it’s about to accelerate rapidly now.  

According to an article printed in Friday’s New York Times entitled

“New federal flood insurance rates that better reflect the real risks of climate change are coming. For some, premiums will rise sharply.”


““Subsidized insurance has been critical for supporting coastal real estate markets,” said Benjamin Keys, a professor at the University of Pennsylvania’s Wharton School. Removing that subsidy, he said, is likely to affect where Americans build houses and how much people will pay for them. “It’s going to require a major rethink about coastal living.”

The government’s new approach threatens home values, perhaps nowhere as intensely as Florida, a state particularly exposed to rising seas and worsening hurricanes. In some parts of the state, the cost of flood insurance will eventually increase tenfold, according to data obtained by The New York Times.”

“The result has been a program that subsidizes wealthier coastal residents at the expense of homeowners further inland, who are more often people of color or low-income. As climate change makes flooding worse, using tax dollars to underwrite waterfront mansions has become increasingly hard to defend.”

“the new system takes effect next month for people purchasing flood insurance. For existing customers, rates will rise starting next April.”


As the article states, the increases may not effect wealthy homeowners who can afford the increase but there is a question about how long insurance will even be available for some properties.  Of course, the higher premiums will force some people to move AND take less for their property as a consequence.  And this will be much more devastating to people in the lower income level who are the least able to digest this circumstance.

Another point that the article delineates is that rates for waterfront property that doesn’t accurately reflect the risk and true cost are subsidized by the rest of us.  How fair is that especially for low income people who are paying to allow very wealthy people live in luxury homes?

On a related topic, the insurance companies aren’t just sitting around allowing their coverages perpetuate their demise. By that I mean that they see, and did so well before the rest of the public, the dramatic increase of losses that they are incurring because of climate change: losses from fires, flooding, wind, mudslides, etc.  So, this title from E&E reporting on 9/20.


Coal, Oil Sands Companies Feel Growing Insurance Squeeze


“Insurance, a basic necessity for any business, is becoming increasingly expensive for some coal and oil sands companies.

That’s because a growing number of insurers are refusing to underwrite companies involved with producing or transporting the most emissions-intensive fossil fuels. Insurance executives are responding to pressure from environmental activists, climate change liability litigation and even their own children, experts and environmentalists say.”


“”Increasingly, both foreign and domestic banks, insurance companies and large investors are curtailing or ending their financial relationships with fossil fuel-related companies,””


“”Our failure to maintain adequate bonding would invalidate our mining permits and prevent mining operations from continuing, which could result in our inability to continue as a going concern,””


“The insurance industry “is coming to an important crossroads here because for a long time the sector has been warning about climate change,” said Swenja Surminski, the head of climate adaptation research at the London School of Economics and Political Science, or LSE.

Now many top insurers are “realizing that you can’t do both,” she said. “You can’t be concerned about climate risk, but then continue underwriting those who contributed to it.””


Insurance companies are also getting pressure from shareholders and the public.  In a 9/17 Sierra Club bulletin it says,


“Huge news! After relentless pressure from allies and partners — and after almost 9,000 Sierra Club supporters called insurance company Chubb to stop insuring dirty tar sands oil — they became the 16th insurer to cut ties with the Trans Mountain tar sands oil pipeline. Liberty Mutual, AIG, and Lloyd’s of London still haven’t taken that step and your voice could make the difference in putting them over the edge.”


Thus the insurance industry is being influenced from multiple directions.  This is one of the reasons that I believe that the transition to a fossil free economy is going to increasingly speed up and happen long before many experts are saying in the public domain.  No insurance.  No new pipelines.  All this portends the end of fossil fuels much sooner then most predict or expect.  

If you are so inclined to get involved, here’s a way below.  Based on this email I clicked and took action. You should too.  


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