"Insurance is there for natural disasters like floods, fires, or storms. But climate change means that natural disasters are hitting harder and more frequently than ever before, and that is upending the insurance market and pushing insurers out of entire cities or even entire states. Without insurance, millions of families will be at greater risk for climate crises. And, as whole communities lose access to insurance, the impact is going to be felt all the way through our economy. " Senator Elizabeth Warren
I've always hated insurance. It's boring, confusing, and a necessary evil. Insurance companies know that most of us hate insurance, which is why they have such cute, funny commercials with Flo, Mayhem, Jake from State Farm, Liberty's Emu, and Dr. Rick. While Dr. Rick advises viewers on how not to become their parents, the commercial says nothing about Progressive Insurance or what it can do for you. They know better than to tell us what's coming and how it will cost us more money.
The housing insurance market is going through a nasty transition, and I noticed it recently with a letter from my insurance company that they were both raising my rates and lowering my coverage. The 12-page letter had lots of fine print, but the bottom line was pretty clear- wind damages and roof repairs would be subject to lower amounts and higher deductibles. Living in the Midwest, wind damage is our biggest concern. We don't have floods or fires that much, but every Spring the threat of tornadoes rears its ugly head.
The culprit driving all of this change appears to be climate change. Whether people believe in climate change or not, the insurance companies certainly do, as do their actuaries who look at weather from the past and project it into the future with a risk profile. Insurance companies are all about making money, and they are increasingly refusing to even write policies in certain areas where the risks outweigh the premiums. Will insurance premiums become unaffordable? In some cases they already have- in Florida, Texas, and California they are doubling and tripling in price because of the natural disasters that have increasingly hit those areas. We in Missouri should feel lucky to only get a 25% increase.
Storms are getting more violent because of increased moisture and heat in the atmosphere that's been pulled from the oceans. That volatile mixture comes down as stronger winds and more precipitation and flooding. We need to be better prepared, and insurance companies won't and can't fill the gaps without our help.
The National Flood Insurance Program stepped in when insurers couldn't handle flooding damages. That program is struggling and is basically a subsidy to people who like to live by the beach and in flood-prone areas. People hate government spending unless it's for their own benefit- especially after natural disasters. We need to get more serious about government programs after the fact and prevention before the fact. And stop hiding from the facts!
What can be done before the fact? We can upgrade building codes to reflect higher risks of wind, flooding, and assaults from Mother Nature. Trees that are near houses need to be evaluated and possibly removed. Reinforce windows with storm shutters, strengthen roofing materials, and install flooring that's water resistant. But the biggest help would be to stop building homes and offices in flood-prone areas (or figure out a way to channel storm water away from them.)
Ideally, you should never need to use your insurance. But if you do, your premiums will go up substantially. Insurance companies are more focused on cute mascots to get our premiums than fixing this problem. They'd rather stop insuring those who are too risky and stick with the safer homes.
An ounce of prevention is worth a pound of cure. Or so the saying goes. This doesn't just apply to home insurance. Auto insurance premiums are on the rise because accidents are on the rise. Americans are lousy drivers, and cell phones, distracted driving, poor sleep habits, and increasing pot use are making us even worse. And don't get me started about health insurance. I could write a book about how better preventative care could bring down healthcare costs. (and others already have.)
We seem to be under the illusion that insurance will save us from ourselves. Make a mistake, and the insurance company (or the government, or mom and dad,) will bail us out.
As you can see from the graph at the top of this essay, natural disasters are on the rise and they only seems to be getting worse. Now is not the time to escape from reality. Now is the time to put our heads together and take action.