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Chelsea, I have a bit of a... see, I don't know if this is sad or if it's just information to be conveyed.

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It's about climate change and I know there's still people that debate that it's happening.

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Do you know what's an easy group to look at who are incredibly

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conservative in their forecasts and their predictions for the future that have definitely started making changes to their industry?

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Because of climate change?

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It's the insurance industry. The insurance industry has seriously made changes. This comes from August 28th, 2023.

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It's in the Atlantic.

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Title of this article is What Your Insurer Is Trying To Tell You About Climate Change by Juliette Kayam.

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Having worked for decades in conservation nonprofits, Beth Pratt, who lives high in the Sierra Foothills in Mid Pines,

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California, understands how climate change is putting her home an even greater risk. Her community is experiencing what she calls

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quote, climate whiplash and quote, forest fires, record heat, massive snow dumps, mudslides, rock slides, and even a tornado.

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When Pratt, now 54, bought her 1,400 square foot house in 1999,

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she thought that the setting was ideal on a big lot near Yosemite National Park. As recently as a decade ago,

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she told me by Zoom, one recent morning she didn't

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particularly worry about wildfires, a problem that now plagues her area with disturbing frequency.

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Pratt said she had been forced to evacuate three times.

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Making her best effort at quote, coexisting with fire, end quote, as she put it, Pratt had metal roofing installed atop her house.

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To all state, Pats longtime home insurer, her resolve appears to be irrelevant. The company dropped her as a customer in July,

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she says. Given her professional expertise in environmental matters, Pratt is the California Regional Executive Director of the National Wildfire Federation.

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She figured that growing climate risks might mean higher bills for insurance,

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but she wasn't prepared to lose her coverage entirely. Quote, I have an NBA. I'm not anti-business. Just raise my rates. End quote.

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As climate related disasters grow in frequency and intensity, major home insurers in some locations are concluding that no premium,

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or at least no premium that customers are willing to pay and state regulators are likely to permit, will cover the potential loss.

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Earlier this year, all state and California's largest insurer, State Farm, announced that they would hold off on writing new policies for homes in the state.

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From 2019 to 2022, payouts to homeowners there more than double the premium revenues from customers increased by only a third,

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according to the industry data reported by the Wall Street Journal. Rising home insurance rates reflects a lot of factors real estate costs building supply prices,

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the whims of global financial markets, and yes, corporate bean counters, desire to maximize profits.

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But more and more homeowners are also paying for the damage that climate change will cause to their property.

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If the continuing risk of fires, hurricanes, and other weather related disasters isn't enough to make Americans think carefully about how and where to build a home,

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perhaps the rising costs of insurance might concentrate their mind.

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Yet policies at all levels of government suppress the signal that insurers are sending.

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That's certainly true in deep blue California, even as prominent politicians there take pride in acknowledging climate risks.

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The state's insurance regulation system is built to discourage premium hikes.

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In many ways, that bias is justifiable, and not only in California, many people live in vulnerable areas, partly as a result of past racial or economic discrimination.

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They buy homes in flood prone areas because more privileged people own all the higher ground.

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A lot of Americans are underinsured because of genuine hardship and suffer more than their wealthier counterparts do from uncompensated losses.

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In California, insurance companies are prohibited from using statistical modeling to assess future fire risks when setting rates.

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Premium increases must be based on insurers' loss history, not on the growing likelihood of serious fires.

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The state's pro-consumer rules can't hold off reality forever, and after all state dropped her, Pratt patched together coverage from other private insurers from the fair plan.

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California's public insurer of last resort, but she said she's now paying twice as much in the past for coverage and slips comprehensive.

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Certain regions of the country have long been prone to tornadoes, hailstones, and hurricanes, or other weather related disasters,

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but this summer the dire signs of climate crisis seem to have multiplied.

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July was the hottest month on record, a rare tropical tornado swept into southern California.

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Wildfires tore through historic town on the Hawaiian island of Maui.

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Fires in Canada brought dangerous levels of smoke through the northeast of the U.S.

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You know what, I was hoping this included something here we go.

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A lot of states have things like California's fair plan, however these systems of last resort are becoming insurers of first resort because so many insurance companies are dropping coverage.

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After Hurricane Ian led to devastating losses in Florida last year, small insurance companies went bankrupt trying to satisfy claims,

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and over the past two years the state's insurance system, Citizens Property Insurance Corporation, has doubled its number of policy holders.

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It now covers about 13% of the homeowner's insurance market in the entire state.

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Is this sustainable?

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Professionals in my field disaster preparedness have one thing in common with insurers risk assessment experts.

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We both spend a lot of time telling people things they don't want to hear.

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The rights preferred form of denial is to brush off the importance of climate change.

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When Donald Trump chided his Republican rival Ron DeSantis in July to quote,

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get home and take care of insurance, and quote,

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the former president presumably wasn't telling the Florida governor to rethink the low lying state's development rules and emergency preparedness policies in light of global warming.

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In the past insurers have generally been able to diversify their own portfolios to balance current risks.

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Historically insurers that do business across the country could afford a bad year in one or two states,

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but the math becomes more challenging as disasters proliferate.

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The cost of reinsurance, essentially coverage that insurers take out to protect themselves against big losses,

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has shot upwards in large part because of growing climate change.

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This didn't quite cover it.

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Insurance companies have also started leaving Florida just because hurricanes have gotten so prolific,

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and it's just like the damage is too much that they can't afford to cover it.

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I wonder what that means as far as moving into the future.

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I mean, people are going to be considering where they're living if they can't get insurance, and on the point of that...

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That's not quite.

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People who can afford to choose where to live will choose, hopefully, not to live in areas where they just can't get insurance.

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That's true.

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It's going, like they said earlier on in this article, it's the poor that are going to be hurt the most by this.

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Yeah, and unfortunately our society is moving more and more toward

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the poor.

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It's stratified.

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There's rich and poor, yes.

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Yeah, and it's really unfair.

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And you said something earlier in the article about people choosing where to build their homes,

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but some people have been in their homes for, you know, how many years?

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Oh, they either have an emotional attachment, a familial attachment to it,

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or that's the only thing they can afford, and yes, you can move.

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Exactly.

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But moving does cost money.

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Especially, I mean, I'm in Vancouver, so I'm in the worst case scenario.

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Pretty much anywhere in the world, but not everybody can even afford to move.

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If they can, I mean, it's not always a consideration of what is this going to look like in 10, 20 years,

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when it's becoming very, very apparent in the last year even.

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What climate change is doing, which is scary.

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So it's not very fair, but I mean, insurance companies are insurance companies and they're looking out for themselves.

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Exactly, but at the same time, they are looking out for themselves.

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And this is why I think if you're ever having a conversation with somebody who, say, does not believe in climate change,

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or has different things to say about it, you can say this, this shows, if we take risk assessment into account,

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that many companies or corporations fully believe that it's real, and it's their entire job to protect or to account for that.

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So if these insurance companies are leaving certain states because the climate change factors that are hitting them are going to cost too much,

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it's something to take into account or at least be aware of.

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I think it's more than be aware of. I can't believe people are denying climate change.

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Look at this last year, people.

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Yeah, yeah.

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Interesting. I never even thought about what that would mean for insurance, but yeah.

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Yeah, but it's the big thing.

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And with that, hopefully that gives you 48 hours of introspection to think about the horrible state the world's in.

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And hey, maybe on Friday we'll have something more fun to talk about.

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Maybe. I filed that under bad news, by the way.

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Yeah, yeah. Anyhow, see you guys on Friday.

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Bye.