A report released Wednesday says states such as California, Florida and Louisiana, which are prone to wildfires and damaging storms and flooding, are likely to see the most dramatic increases in premiums.
that happened in Vermont and Maine in July, are examples of events that could drive up insurance costs for homeowners in other states.
"Some places may be impacted very minimally, but other places could see massive increases in insurance premiums in the coming years," said Jeremy Porter, head of climate implications at First Street and a co-author of the report. Skyrocketing insurance costs are a serious concern for the small town of Paradise in Northern California, which was nearly wiped out by a deadly 2018 wildfire that killed 85 people.Jen Goodlin moved back to her hometown from Colorado with her family in 2020, determined to help in the town’s recovery. They began building on a lot they had purchased, and moved into their new house in October 2022.
Record numbers of Americans are now insured through state-affiliated "insurers of last resort" like California’s FAIR Plan, or Louisiana or Florida’s Citizens property insurance companies. These programs were designed to insure properties where private insurance companies have refused to insure or the price for private insurance is too expensive.
As a result, California’s FAIR plan, which was created 50 years ago as a temporary stopgap measure for those impacted by riots and brush fires in the 1960s, is now the only option available to homeowners in some ZIP codes. Even the backstop programs are buckling under tremendous losses. Louisiana's insurer of last resort, Citizens, raised its rates for 2023 by 63.1% statewide to cover higher costs.
Mowery added that many reinsurance firms now have resources dedicated to studying the impact of climate change on how to price catastrophes.
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