insurtech 14/December/2019

Insurtech News > New kind of insurance misery on homeowners: Climate change rainfall

Nature is fighting with insurance! People who are living in the riskiest areas are not able to take advantage of home insurance - because of global climate change. Most home insurances in the riskiest areas are unaffordable for hurricanes, wildfires and flooding. 

Every insurance firm pays a record amount of money to homeowners who have suffered a partial or a total loss, but in this kind of situation, some of the firms retreat or raise premiums in places where claims are owed. For example, company payouts for natural catastrophes, in 2017 and 2018 reached $219 billion, the highest ever for a consecutive two-year period. 

Additionally, in each state of the United States of America, price of premiums has increased annually between 2007 and 2016. In the last three years, it was seen that in the countries that are at greatest risk of wildfires, the number of new and renewed homeowners’ insurance policies decreased by 8,700, according to the California Department of Insurance.

"Market participants have woken up to the reality that [wildfires] can happen again and probably will. The expected value of future wildfire liabilities is so much bigger [thanks to climate change].
—Michael Wara, a research fellow at Stanford University's Energy and Policy Program

Some warn against the firms using global climate change to hide up potential acts of negligence, like failing to trim trees or properly maintain equipment. This can cause a cycle. Insurers still write policies in areas prone to disaster, however, they tend to hike monthly premiums to balance the cost. But, if people can not benefit from home insurance, nature may win its war against insurance. Most of the homeowners, who are living in this kind of areas, need help. Additionally, they need wind-related insurance. It is mostly with the regular insurance or is sometimes sold as another package. This case shouldn't be ignored.