Dave Jones, director of the Climate Risk Initiative at the Center for Law, Energy & the Environment, recently published an article in the Yale Law Journal analyzing how climate change is driving the growing property-insurance crisis and suggesting federal and state policy solutions.
“The Uninsurable Future: The Climate Threat to Property Insurance, and How to Stop It” compares the response of two states — Florida and California — and finds that neither approach will keep insurance available and affordable in the long run. Insurance is the canary in the climate crisis coal mine, Jones argues, and the bird is dying.
Florida has substantially deregulated insurance , while California has made regulatory changes that will result in even larger rate increases. Both moves, Jones writes, will be “overwhelmed by the rise in risk and increased losses driven by climate change” because they fail to address the underlying causes of the losses: emissions from the fossil-fuel industry and other greenhouse gas emitting sectors and increased development in high-risk areas.
There’s no insurance regulatory magic wand to fix the insurance system short of reducing emissions, Jones argues. But state and federal legislators can take actions to help keep insurance available in the short run, including requiring insurers to transition from investing in and underwriting fossil fuels, and requiring insurers to take property, community, and landscape level risk reduction measures into account when pricing and deciding whether to write or renew insurance.
“To preserve an insurable future, we need to transition from burning fossil fuels and from other greenhouse gas-emitting sectors” he writes. “Otherwise, the insurance ‘canary in the coal mine’ will sing no more.”
Jones is an international leader and expert on climate risk and financial regulation. He served two terms as California’s Insurance Commissioner from 2011 to 2018, leading the Department of Insurance and regulating the largest insurance market in the United States. Since joining CLEE he’s been a sought-after expert on the challenges facing the insurance industry and insurance regulators, in California, nationally, and internationally, as they deal with the impact of climate change.