A new report from the US Treasury Department reveals a sharp increase in home insurance premiums, particularly in areas most vulnerable to climate-related disasters. The report attributes this surge to the growing frequency and severity of these events, which have led to billions of dollars in damages.
Climate-related natural disasters are significantly increasing insurance costs for homeowners, particularly in regions most susceptible to these events, according to a report released by the US Treasury Department on Thursday. The report, which analyzed data from 2018 to 2022, revealed a concerning trend of rising insurance premiums driven by the escalating frequency and severity of climate-related disasters.
During the study period, the US experienced 84 disasters costing $1 billion or more, excluding floods, resulting in a combined $609 billion in damages.While insurance costs across all categories rose 8.7% faster than inflation, the burden was disproportionately felt by homeowners residing in areas most impacted by climate events. The report found that consumers living in the 20% of zip codes with the highest anticipated annual losses paid an average premium of $2,321, a staggering 82% higher than those in the 20% of lowest-risk zip codes. This disparity underscores the growing financial vulnerability of homeowners in high-risk areas.Secretary of the Treasury Janet Yellen emphasized the severity of the situation, stating, 'Homeowners insurance is becoming more costly and less accessible for consumers as the costs of climate-related events pose growing challenges to both homeowners and insurers alike.' The report also highlighted the alarming trend of nonrenewal rates, which were approximately 80% higher in high-risk areas compared to less-risky regions. Insurers paid an average claim of $24,000 in high-risk areas, significantly higher than the $19,000 average in lowest-risk areas. The report paints a stark picture of the escalating costs and challenges associated with climate-related disasters, underscoring the urgent need for comprehensive solutions to mitigate these risks and protect homeowners from financial hardship
Climate Change Insurance Homeowners Disasters Treasury Department Costs Premiums
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