Parts of America are becoming uninsurable
ELLIE LAKS remembers watching the wildfire crest the desiccated hills in front of her property. “We’re talking about a wall of fire coming towards you and eating everything in its sight,” she recalls. Ms Laks runs the Gentle Barn, an animal sanctuary nestled in the mountainous scrublands of Santa Clarita, in Los Angeles County. On most days the farm is a soothing place. But on October 24th 2019, fear was the dominant emotion. “You can’t see, you can’t hear…your throat hurts, you’re coughing, you can hardly breathe,” she says. The Gentle Barn survived the blaze. But this year, Ms Laks lost her property insurance when her insurer decided to limit its business in California. She is not alone. According to state data, 85% of properties in one Santa Clarita zip code were dropped by their insurers between 2015 and 2021.
In theory, insurance sends a risk signal. Homeowners could expect their policy to be expensive if they live in a floodplain or in a forest. It would be cheaper in places less prone to storms, wind or fire. Yet for decades distortions in federal and state insurance markets have suppressed rates, enabling a mass migration to hazardous areas. The population of Florida, which suffers more hurricanes than any other state, grew more than twice as fast as the country did between 2000 and 2020. Texas, which is vulnerable to storms that form in the Gulf of Mexico, grew even faster. By 2015, the value of insured property along the Gulf and Atlantic coasts had passed $13trn. A recent study from researchers at Stanford, the University of California in Los Angeles and the Australian National University suggests the population living in the “wildland-urban interface”, where nature meets development, doubled between 1990 and 2010, to nearly 21m people. Even more striking, the population in areas most prone to wildfires grew by 160%.
While Americans were moving to risky places, climate change was making them…
2023-09-21 07:51:46
Link from www.economist.com
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