The Fires This Time

Our world was built for a climate that no longer exists. Today's disasters can teach us how to rebuild, but only if our leaders start taking climate change more seriously.

Illustration by New Rules Media

As our warming planet delivers more wildfires, hurricanes and other disasters, the nation’s home insurance market is where many Americans are beginning to feel the economic reality—and emotional impact—of climate change.

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NEW YORK —Jason, a nephew and Hollywood sound engineer, says he won't soon forget seeing the Palisades wildfire race toward his Los Angeles neighborhood. But what he'll remember the most, he texted me today, were the sounds the firestorm made when it got there— propane tanks exploding, power lines popping, the glass doors on ovens shattering, metal street signs banging against parking lot rails, dogs barking—and ever, always, the relentless Santa Ana gales howling. Jason escaped on his bicycle.

This week, as Jason searches to find temporary housing, prominent, right-wing climate change deniers are now making noise of their own, spreading false rumors and conspiracy theories over local airwaves to persuade angry L.A. homeowners that climate change isn’t real. [No, the California wildfires were not really caused by a “directed energy weapon” deployed by President Joe Biden to ignite the fires and disrupt more American communities.]

For Jason, the consequences of this past week have made climate change painfully real. The new, climate-driven insurance crisis that’s now spreading across the United States arrived at Jason’s home in the form of a letter, a few weeks before the Christmas holiday. His insurance company, State Farm, told Jason, like 30,000 other homeowners living in L.A.—some 1,967 in the Pacific Palisades neighborhood now destroyed by the fires—that his homeowner’s policy would not be renewed. Some of the other major home insurance providers, including Farmers and Allstate, are also deserting homeowners in high-risk areas in other states across the country as climate shocks worsen. Without some level of insurance, it’s nearly impossible to get a mortgage; without a mortgage, most Americans cannot buy a home.

Jason recently applied for California’s insurance of last resort, called the FAIR Plan, but the organization said this week it only has $377 million available to pay thousands of local claims that could reach into the billions.

“The visible signs of climate change are now reaching a crescendo, and a national insurance crisis is beginning to emerge,” says Benjamin Keys, a professor of real estate and finance at the Wharton School. “We are not ready for these tremendous changes, and we need to be. …We’ve now entered a period where climate risk is rising, but as more insurers pull back, that could very well start to destabilize the communities they leave behind.”

This past week’s Los Angeles wildfires, which scientists say would have been more manageable without the exacerbating effects of climate change, are still not contained completely, and now are estimated to be causing insured losses that could top as much as $20 billion or more. In Florida, Hurricanes Milton and Helene last year, alone, inflicted insured losses approaching $50 billion. For the first nine months of last year, insured losses in the U.S. due to climate-related disasters totaled $89 billion, up from the 21st century average for that period of $49 billion, according to Aon Insurance.

Following the Data

A recent congressional investigation into the outbreak of non-renewals, led by the U.S. Senate Budget Committee and chaired by Sen. Sheldon Whitehouse, D-Rhode Island, reveals more details about how home insurance companies are dropping homeowners living in high-risk climate regions of the country.

Last month, the committee concluded its review of national, county-level, non-renewal data covering the years 2018 through 2023, as provided by the 23 top companies comprising two-thirds of the homeowner’s insurance market. Here are the highlights of the committee’s final report, Next to Fall: The Climate-Driven Insurance Crisis is Here—And Getting Worse.

[To see where home insurance policies were dropped in your state, check out this interactive map of the home insurance crisis created exclusively by The New York Times, using some of the data from the Senate investigation.]

• Climate change is driving the increase in non-renewal rates, as the counties which are most exposed to climate-related risks such as wildfires or hurricanes are the counties seeing the highest non-renewal rates;

• Florida, Louisiana, California and Texas are not the only places experiencing spiking non-renewal rates and increasing premiums. Florida has the highest average statewide non-renewal rate; Texas is not even in the Top 10. Southern New England, the Carolinas, New Mexico and counties in the Northern Rockies, Oklahoma and Hawaii all report high non-renewal rates, demonstrating that the full panoply of climate-related effects (hurricanes, wildfires, severe convective storms, hail, extreme precipitation, and sea level rise) are all destabilizing insurance markets.

• The data confirm a correlation between rising non-renewal rates and rising premiums, underscoring that climate change has become a major cost-of-living issue for families across the country.

“One thing is certain,” Whitehouse said. “Climate change-related extreme weather events will become both more frequent and more violent, resulting in ever-scarcer insurance and ever-higher premiums” unless new payment options are created.

“The rising rate of non-renewals is predicted to decrease property values in communities where insurance becomes impossible to find or has become prohibitively expensive. If policy-makers fail to act, a collapse in property values could have the potential to trigger a full-scale financial crisis similar to what occurred in 2008,” Whitehouse added.

“Climate change is no longer just an environmental problem. It is now becoming a looming economic threat.”

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NOTE: To see where home insurance policies were dropped in your state, check out this new map of the insurance crisis using some of the data from the Senate investigation.