California’s home insurance crisis gets worse amid rising climate threats
The current risk assessment models in the insurance industry are no longer tenable in the face of the climate crisis. Two major insurers, State Farm and Allstate, have halted new homeowners’ policies in California. And, you guessed it, it’s because of prevailing climate change-related disasters like fires and mudslides that make payouts to policyholders unsustainable for these insurance companies. It’s part of the trickle-down effect of increased climate-driven disasters.
In California, regulatory measures that prevent insurers from raising rates have created a dilemma. While such constraints help maintain affordable costs for homeowners, they make it difficult for insurers to cover policy costs and handle increased payouts. The scenario has culminated in more considerable insurance market risks, which must accurately reflect the true extent of climate change-induced disasters. The implications for the insurance industry are far-reaching—it will have to raise rates, risk upsetting homeowners, or potentially go out of business if regulations prevent rate increases. Furthermore, the possibility of homes becoming uninsurable can affect potential homeowners’ ability to get a mortgage.
In short: Insurance companies must adapt their pricing and risk evaluation methods to account for climate change’s increased and unpredictable risks.
The ripple effects of the Great Atlantic Sargassum Belt
Human activities have caused an unprecedented explosion of seaweed growth, notably Sargassum seaweed, in the Atlantic Ocean. It has created what’s known as the Great Atlantic Sargassum Belt and poses unforeseen and potentially significant impacts.
The Great Atlantic Sargassum Belt originates from nutrient-dense agricultural runoff and deforestation debris carried into the Atlantic by the Amazon River floods. It stretches from the west coast of Sierra Leone, across the Atlantic, through the Caribbean, and into the Gulf of Mexico.
Sargassum emits hydrogen sulfide, which smells foul and can cause eye, throat, and skin irritation. That means the excessive Sargassum growth washing up on shires will continue to affect tourism. Caribbean and coastal Florida economies will need more time and money to remove seaweed from beaches.
Worse yet, the Sargassum seaweed has become a plastic trap, making it more likely that wildlife will ingest more plastic. The plastic tangled in the seaweed also attracts a kind of bacteria called Vibrio, which can pose health risks to humans and marine life. The proliferation of Sargassum also poses an existential threat to coral reefs, physically smothering the reefs from light and oxygen. In extreme cases, large patches of Sargassum can choke desalinization plants, which happened in St. Croix and led to an 18-day state of emergency.
1. Axios, “Uninsurable America: Climate change hits the insurance industry,” https://www.axios.com/2023/06/06/climate-change-homeowners-insurance-state-farm-california-florida Accessed June 8, 2023
2. VOX, “A giant patch of seaweed is growing to record sizes in the Atlantic. Sorry, Florida.,” https://www.vox.com/down-to-earth/2023/5/11/23716884/florida-caribbean-beaches-seaweed-sargassum Accessed June 8, 2023