A world on fire
How real estate owners, insurers and government must work together to fight climate change
The human cost of wild fires that burn through dense neighborhoods is immeasurable; and no insurance policy can replace community members and loved ones. As the death toll rises in the Eaton wild fire, our hearts are with the mourning families and displaced communities faced with impossible circumstances.
We must do more than sit by and bemoan the inevitable. To prevent future losses, we all have a role to play in responding to climate change. That is why I joined Premiums for the Planet last year as Head of Insurance. Policyholders of all sizes - from single family homes to Fortune 100 conglomerates - rely on risk transfer for financial resilience, and the urgent conversation around uninsurability for California, New Orleans and Florida homeowners is just the beginning.
I don’t envy coastal insurance departments’ role in grappling with these challenges, and I’m encouraged by Insurance Commissioner Lara’s willingness to try new ways of stabilizing the market in California. It’s true we need insurers to stay in-market and we can’t expect reinsurers to accept risk without reward. It’s also true that property owners and municipalities must adopt more sustainable and resilient land management techniques and that some areas may become uninhabitable (or stay at your own risk).
We must also look at the bigger picture. The insurance industry manages a staggering percentage of global GDP and actively invests in and underwrites the very causes of climate change, accelerating the rate of crisis. If we are to create a layer of reinsurance financed by the American people - as it appears the California regulation does and like many public insurers of last resort - we must also demand greater accountability from the industry we’re propping up. Policyholders deserve to know how extensively their insurers profit from the root causes of our current crisis. We must dare to push the insurance industry to step up and be part of the solution.
