8/7/2023 0 Comments Alex lee orbis technologiesBut as the years have gone by and the insurance industry remained in the state - propped up, it should be noted, by California policies that prohibited insurance companies from dropping their customers after a costly blaze - it seemed the risk calculations were not as obvious as they seemed to observers. Lisa Dale: In truth, many people, including me, expected this to happen much sooner, as financial risks from climate change-driven wildfire would seem to be prohibitive for insurance companies. Climate change is, among other things, the greatest challenge to the insurance market of these decades. The model currently used by insurance companies is not sustainable and it fails especially in the case of climate change, where historical information of events is absent, where one single event is sufficient to create enormous damage to people and infrastructures, and where it is difficult to predict both in space and time. Marco Tedesco: What is happening is a “phenomenon” there, but it is the tip of the iceberg of what we expect to see in the future. How surprising was this move by State Farm? Marco Tedesco is a glaciologist at the Climate School’s Lamont-Doherty Earth Observatory.Īll three scholars will delve deeper into the challenges of moving people and communities away from climate-related risks at the upcoming Managed Retreat Conference, hosted by Columbia Climate School from June 20 to 23. Alex de Sherbinin is a geographer at the Columbia Climate School’s Center for International Earth Science Information Network ( CIESIN). Lisa Dale is a lecturer at the Climate School and the co-director of the Undergraduate Program in Sustainable Development. As climate change magnifies the risks and impacts of disasters like wildfires, hurricanes, and floods, the insurance industry is being forced to shift strategies.ĭo decisions like State Farm’s aid in climate adaptation and moving people out of harm’s way? And what do decisions like this mean for vulnerable communities? Below, two Climate School experts weigh in on these questions and more. Allstate announced a similar move just a few days ago, as did AIG last year, and insurers are increasingly wary of operating in hurricane-stricken states in the Southeast. State Farm is not alone in its departure nor is California the only state in the red zone. The company made it clear that it no longer made financial sense to continue covering properties in the state due to its growing risk of wildfires, in addition to other challenges. State Farm recently announced that it will no longer be offering new insurance policies to homeowners in California. The remnants of California’s Coffey Park neighborhood after a wildfire in October 2017.
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