An expert warns that California's insurance crisis, fueled by increasing climate-related disasters, could trigger nationwide financial instability similar to the 2008 housing bubble burst. He highlights the growing difficulty for homeowners in obtaining insurance and the potential for massive financial losses from events like wildfires and rising sea levels.
FILE - Flames from the Palisades Fire burns a home during a powerful windstorm on January 8, 2025, in the Pacific Palisades neighborhood of Los Angeles.
“On the other hand been withdrawing insurance coverage for a number of years, so there are a lot of people that don't have coverage and aren't going to be able to rely on being compensated for their loss,” Yohe said. “So, it is a crisis, because they are in an environment that they have never experienced before and for which they have not planned.”
“I'm not saying that's going to happen, and I'm not saying that there's going to be financial instability because of the California fires,” Yohe said. “I'm just saying it is a nonzero probability that we should be aware of. And it is a fundamentally spectacular reason to continue to worry about climate change, and monitor it, and keep doing the science, and maintain the data collection, and create a new initiative for global science for the southern hemisphere.
NOAA said total costs for those 27 events last year is estimated at $182.7 billion, a figure it said might increase still by several billion dollars. “This is a really big deal,” Marc Ragin, an expert in risk management and insurance at the University of Georgia, previously said of the Treasury’s new report.The Treasury also released a large subset of the aggregated ZIP code-level data it used in its report.
Some mitigation efforts are costlier than others. It could cost more to raise your home above flood level, for example, than to clear brush to create a 5-foot defensible space as a guard against wildfires.
Economics Climate Change Insurance Crisis Climate Change Financial Instability California Wildfires Homeowner's Insurance
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