Uncertain about Climate Change? Ask your Insurance Agent
Tonight, I asked our guest, Ann Marie Danimus, about how to persuade a climate skeptic that climate change is real. She said, “Ask a farmer.” She added, “and ask your insurance agent” (or words to that effect). See video here.
The point is that our economy is adjusting to the risks of floods and drought, wind and fire. Professional managers are hedging their bets faster – and more air-tight - than most of us. And insurance companies are densely populated with professional managers. That leaves the rest of us playing catch up.
Where are we now? Are we in rural Washington finding it more difficult to insure our homes, shops and farms? Are our premiums simply higher to reflect the increased risk of wildfire, or rising sea levels? How does our economy work to hedge the enormous risks of a disruptive climate? Is there anything we can do?
Questions. We may not have the answers but the Insurance Commission can give us information and context.
It is reported that Allstate and State Farm have stopped writing new insurance policies in California. Climate change – and insurance losses – are the culprits. Wildfires and floods are causing major losses of property.
November’s policy briefing informs us on an emerging issue. We will look at the incidence of property insurance pull back in Washington. Is it currently a fact or just a fear? Either way, climate change poses serious challenges to the viability of the insurance and reinsurance industry. You may at first yawn at the prospect of a profit squeeze on the insurance industry. Remind yourself, though, about how your bank manages its risk by requiring you to provide proof of property insurance to back up your mortgage.
Our economy works on allocating risk, and typically risk allocation replicates the distribution of political power. The vulnerable ultimately bear more than their share of risk, whether paid in dollars or not.
In the State of Washington, the vulnerable have a champion, The Insurance Commission. Staff from the Insurance Commission will help us understand how climate change feeds pretty much directly through to private homeowners and our ability to manage our own risk. Along the way, they will assess what role the state can play in helping us buffer the financial consequences of fires and floods in our neighborhoods.
So, our goals are to get a report on whether insurance denial is happening in Washington and, if not now, when. We will learn about insurance and reinsurance and why climate change (heat, rain, fire, flood) is challenging these fundaments of our economy. And we will learn to what extent state policy (Insurance Commission, Legislature) can buffer the financial burden of climate change for rural home and business owners.
Don Schwerin is the Chair of the Ag and Rural Caucus of the Washington State Democrats. He is a former State Committee Person for the Walla Walla County Democrats.