Insurance Companies Abandoning Disaster-Prone States

 State Farm, the largest homeowner insurance company in California, has announced it will stop
selling coverage to homeowners throughout the state due to the rapidly growing catastrophe
exposure caused by climate change.
 Insurance companies are raising rates, restricting coverage, or pulling out of high-risk areas,
making it more expensive for people to live in their homes.
 Homeowners in wildfire-prone areas, parts of eastern Kentucky, and Louisiana are experiencing
quadrupled flood insurance rates, a market in crisis, and the need for subsidies to attract insurers,
respectively.
 Most big insurers have already pulled out of Florida, leaving homeowners to rely on smaller
private companies that are struggling to stay in business.
 Allowing people to live in homes that are becoming uninsurable or prohibitively expensive to
insure is unsustainable, and policymakers should consider buying properties at high risk or
relocating residents from dangerous communities.
 California's situation resembles Florida's experience after Hurricane Andrew in 1992, where losses
bankrupted insurers and caused most national carriers to leave the state.
 Louisiana's insurance market is in crisis, with insurance companies failing and the state resorting
to subsidies to stabilize the market.
 Homeowners in coastal states also face rising costs for flood insurance, as rates are being set to
reflect the actual flood risk, leading to significant price increases.
 Policymakers should focus on reducing risk through measures like tougher building standards to
help keep insurance affordable, as government-mandated programs designed as backstops are
starting to crack under the pressure of climate shocks.