How a Climate Crisis Becomes a Financial Crisis

Transcript:

Doug McIntyre: Let’s take a look at insurance.

One of the stories that you’re seeing in the news a lot right now is insurers are going bust in some of these states because you have climate problems that are so destructive that insurance companies can’t afford to insure them anymore.

Now, a couple of years ago, that was Florida.

Everybody said, well, you know, a lot of hurricanes, high insurance costs for condos on the coasts.

I sort of get that.

But what’s happening right now is you have insurance companies in places like Iowa starting to say that they’re incurring losses.

They can’t get reinsurance underwriters.

And in that case, it’s because of tornadoes and hail.

So what does this do to the insurance industry for starters?

Dave Callaway: Well, this is how climate change becomes a financial crisis, right?

We’ve talked about how it’s an extreme weather crisis, right?

And people will feel it and changes to their daily lives.

We haven’t talked about how it becomes a financial crisis.

So yeah, it started in Florida a couple of years ago.

It started to happen in California where I am.

You know, insurers started pulling out of the state, not reinsuring homes, not insuring homes again or renewing policies because of wildfire dangers.

And so now it’s starting to spread to Iowa, starting to see it pop up in other states, Texas, that type of stuff.

Eventually what happens is, you know, if you can’t get insurance, you turn to the state.

The states have kind of small little pools of funding available for major disasters when insurance can’t be there right away.

And these pools are not equipped to handle what could be 20 to 40 percent of their population suddenly making claims.

That affects the state’s credit rating, and there we have a financial crisis.

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