Forget 'woke' investors; free market raising the climate cost in Florida, Texas

Insurance companies use math, not politics, and their homeowner rates tell the climate risk story.

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The Thinker in The Gates of Hell at the Musée Rodin, Paris. Photo: Musée Rodin.

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — Florida residents are paying $803 more per year for homeowners insurance because of climate change risks. Texas residents are paying $1,170 more.

That’s the conclusion I reached from my analysis of homeowner insurance rates in those states most vulnerable to climate-related disasters. There is a statistically significant correlation between the magnitude of that vulnerability and insurance rates.

There is much irony in this conclusion. Florida and Texas have led the charge against so-called “woke” finance. Asset managers have been prevented from doing business with state agencies for having the audacity to, in effect, suggest that climate change poses huge investment-related risks. Ironically, the folly of these two states’ approach is being revealed not by a bunch of bleeding-heart liberals but by that bastion of conservative ideology: The free market.

Insurance companies don’t care about politics or ideology when setting their premiums. Their very survival requires that they accurately assess risk and set their premiums accordingly.