California’s former insurance commissioner offers perspective on what insurance companies’ retreat from California means.
“Insurance isn’t magic,” Jones said. “Insurers are rational economic actors … in business to make money. And in some parts of the United States for some risks, they’re deciding that there simply isn’t a price high enough for them to make sense insuring that particular risk in that particular geography.”
Jones warned that the path toward an “uninsurable future” we’re currently on could eventually affect the housing market, though it’s not inevitable. If insurance premiums continue to climb and more people can’t afford them and their mortgages, they could default and lose their homes. “I’m not suggesting that we’re there yet,” he noted, “but it definitely bears paying attention to, because that’s a potential path of transmission of this risk in ways that could have negative consequences for our financial system.”
So what else should the state and federal government be doing to avoid the “uninsurable future” Jones warns about? He shared a few ideas:get serious about assessing the risks climate change poses to the financial systemand well behind other countries’ efforts., especially prescribed burns. Jones said officials finally recognized that “a century and a half of fire suppression has resulted in forests choked with fuel.
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