‘The canary is dying’ - climate change comes for property insurance

Why the free market needs government incentives to withstand potential losses

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Still ‘temporarily closed.’ This Chase branch building on W. Sunset Blvd. in Pacific Palisades burned in the devastating Palisades Fire in January. Photo: CALFIRE/flickr.

(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) — Property insurance companies have for years been considered the canary in the coal mine when it comes to the worsening climate crisis.

That “canary is now dying,” according to David Jones, director of the Climate Risk Initiative at the University of California’s School of Law and former California Insurance Commissioner. That’s because the long-dreaded future of un-insurability is now upon us. There are whole sections of the country (and world) where property owners can’t buy insurance, either because it simply isn’t available or its cost has risen to prohibitive levels.

Jones used his canary analogy in a panel discussion organized last week by the Center For American Progress titled “Managing the Climate Change-Fueled Property Insurance Crisis.” The analogy is apt because of the key role that property insurance plays in the entire economy. Without insurance, homeowners can’t obtain a mortgage, and without mortgages the real estate market could collapse.