“You can have debates about these various proposals, but what’s underlying all that is climate change, and it’s only going to get worse,” Jones said. It’s just that insurance is the first system to face collapse. Second, how we assess risk will probably be changed from models that look at past disasters to models that project forward, taking risks of climate change into account.Īnd third, Lara will probably seek to streamline the process of raising rates - which in California can be hard to do with regulations designed to protect consumers from obscene price hikes.īut this isn’t just about insurance. And so what we will probably see in coming weeks is a three-pronged plan meant to attack the immediate problem while leaving the larger, more profound questions for later.įirst, Lara will probably work to bolster the state’s FAIR plan, the insurance of last resort for many - including Newsom, who owns a home covered by it. Lara, of course, does, but his power isn’t unlimited. In the short-term, fixing this mushrooming insurance crisis will probably fall to California’s insurance commissioner, Ricardo Lara - perhaps through an executive order from Newsom, though the governor doesn’t have authority to regulate insurance. “If your homeowner’s insurance went from $2,000 a year, which is relatively low, but skyrocketed to $6,000 a year, in one year, who’s monitoring that? When it gets to that number, it becomes a little too much.”Ĭalifornia Rebuild | Reburn: Should we be rebuilding tiny, vulnerable Northern California towns?Ĭalifornia needs a plan for how and where we will live in the future. “On the Assembly side, it was a great concern that we did not overprice our constituents,” he said. In California, with its poverty and entrenched income inequality, many just can’t afford it. Jones-Sawyer said he’s deeply concerned about passing along the financial burden of climate disasters to consumers, specifically citing residents in his South L.A. “How do we work together to solve this in a way where everybody feels they’re sharing a lot of the burden?” asked Assemblymember Reggie Jones-Sawyer, who is a member of the Assembly Insurance Committee but wasn’t directly involved in the negotiations in recent weeks. Which means we need to acknowledge that climate change has altered the math on protecting the places we live and work. And yes, other factors including inflation on construction are part of the equation.Ĭlimate change should not be a free pass to gouge consumers - despite all those disaster claims, insurance companies are still making money, though their profit margins might not be as thick as in the past.īut insurance is the safest bet against personal calamity, climate-induced or otherwise, so we need insurers to remain in the market. Of course, some of their claims around climate risk are posturing to increase rates. Let us be clear on this: Of course, insurance companies want to maximize their profits. “The risk is too high, at almost any price.” Throughout the United States, in different geographies, we’re reaching a point where climate change is driving to an uninsurable future,” said Dave Jones, a former California insurance commissioner and current director of UC Berkeley’s Climate Risk Initiative. “People can only afford so much, even middle-class people or upper-middle-class people. That holds true for California with its eroding coastline, mudslides and fire-prone mountains for Florida, Louisiana and Texas with hurricanes for places such as Kentucky and Vermont where extreme weather has led to devastating floods.Įven for renters and car owners, the cost of insurance is rising and will rise further as temperatures do. Even a compromise wouldn’t be politically popular, which may be why that part of the debate has stayed largely behind closed doors.īut as Newsom pointed out, the pressure building on the insurance industry is “America’s coming attraction in terms of impacts of climate.” Rumor has it that a Legislative fix was held up largely because no one could agree on an answer. Or, should insurance companies be forced to somehow continue carrying the burden of climate disasters?
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