Menu close

Parts of the U.S. are becoming uninsurable due to climate change

June 1, 2023

One of the bigger stories of this past weekend came with the bland heading “California New Business Update” – State Farm, the biggest homeowner insurance company in California, is no longer accepting new homeowner or property insurance applications from anyone in California. The reasons? Rising construction costs, “rapidly growing catastrophe exposure, and a challenging reinsurance market.”

“Catastrophe exposure” in California is code for wildfires. A similar story could be written about Florida, where the cost of storm insurance has skyrocketed or, in some cases, is impossible to buy. And the reinsurers – the companies like Swiss Re and Munich Re that insure insurance companies – are particularly sensitive to climate change as well, since they must necessarily have a long-term outlook.

It’s hard to overstate the significance of this. If California were a country, it would be the fifth-largest economy in the world, and it’s becoming uninsurable due to climate change. Meanwhile, rich countries are peddling insurance schemes for poor countries as payments for “loss and damage.” 

It’s time to get real – as we’ve long said, insurance against climate impacts is far from a silver bullet – and increasingly, it is going to be entirely unviable for many parts of the world.