Global warming is driving insurers out of California

For as long as I’ve been paying attention, folks talking about climate change have been pointing to insurance companies as a way to track damage that might not otherwise be easy to see. If the planet’s temperature really was rising, and that was causing an increase in extreme weather, then those companies that insure against climate disasters would have to increase their rates and/or change their policies, to remain profitable. It’s one of those areas where society bumps up against the “natural world” with very little cushion, and sure enough, insurance companies have noticed the change. Take this Smithsonian article from back in 2013:

“Our business depends on us being neutral. We simply try to make the best possible assessment of risk today, with no vested interest,” says Robert Muir-Wood, the chief scientist of Risk Management Solutions (RMS), a company that creates software models to allow insurance companies to calculate risk. “In the past, when making these assessments, we looked to history. But in fact, we’ve now realized that that’s no longer a safe assumption—we can see, with certain phenomena in certain parts of the world, that the activity today is not simply the average of history.”

This pronounced shift can be seen in extreme rainfall events, heat waves and wind storms. The underlying reason, he says, is climate change, driven by rising greenhouse gas emissions. Muir-Wood’s company is responsible for figuring out just how much more risk the world’s insurance companies face as a result of climate change when homeowners buy policies to protect their property.


“Catastrophes are complex, and the kinds of things that happen during them are complex, so we are constantly trying to improve our modeling to capture the full range of extreme events,” Muir-Wood says, noting that RMS employs more than 100 scientists and mathematicians towards this goal. “When Hurricane Sandy happened, for instance, we already had events like Sandy in our models—we had anticipated the complexity of having a really big storm driving an enormous storm surge, even with wind speeds that were relatively modest.”

These models are not unlike those used by scientists to estimate the long-term changes our climate will undergo as it warms over the next century, but there’s one important difference: Insurance companies care mainly about the next year, not the next 100 years, because they mostly sell policies one year at a time.

But even in the short term, Muir-Wood’s team has determined, the risk of a variety of disasters seems to have already shifted. “The first model in which we changed our perspective is on U.S. Atlantic hurricanes. Basically, after the 2004 and 2005 seasons, we determined that it was unsafe to simply assume that historical averages still applied,” he says. “We’ve since seen that today’s activity has changed in other particular areas as well—with extreme rainfall events, such as the recent flooding in Boulder, Colorado, and with heat waves in certain parts of the world.”

Again, that article was published in 2013. Unfortunately, things have progressed since then, and I doubt you need me to tell you that. The most dramatic example, in the United States, is probably the growing California fire season, which has created truly hellish conditions, and given us this surreal and terrifying commute to work:

The image shows a number of cars on a freeway, slightly out of focus. It's dark, and the cars all have their lights on. In the background, the world is on fire. The hillside nearest the camera on the left of the image seems to be smouldering, more smoke and coal than fire. Beyond that, you can see a brighter orange, leading to yellow flames on the righthand side of the picture, illuminating the smoke that fills the sky. The cars are all driving straight towards the inferno. It's as if they're commuting into a fiery underworld.

The image shows a number of cars on a freeway, slightly out of focus. It’s dark, and the cars all have their lights on. In the background, the world is on fire. The hillside nearest the camera on the left of the image seems to be smouldering, more smoke and coal than fire. Beyond that, you can see a brighter orange, leading to yellow flames on the righthand side of the picture, illuminating the smoke that fills the sky. The cars are all driving straight towards the inferno. It’s as if they’re commuting into a fiery underworld

This picture captures something that has been bothering me since the pandemic started – the way we’re all forced to act as though everything’s fine. The pandemic was sort of an appetizer. We had our faces rubbed in the fact that the people running our world would happily see us dead, so long as it didn’t disrupt their lives. After all, they work so hard to ensure that there are always people without jobs, so if some of them, they can be replaced.

The main course, of course, is climate change. The bit of the world you live in can be on fire, but you’re expected to go to keep on working, because profit is what matters. Human extinction is a real possibility here, and every delay in action makes it more likely. We know what’s causing this, and we know that the capitalist obsession with overproduction and endless growth is the primary driver of the problem. And yet, people are expected to continue adding fuel to that fire, because it’s the only way they’re allowed to survive.

This can’t go on forever. Everything is not normal, and a new announcement from State Farm indicates that California, at least, has reached a crisis point:

State Farm has stopped accepting homeowner insurance applications in California, citing the growing risk from catastrophes like wildfires and the rising cost to rebuild.

“State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market,” the insurance giant said in a statement on Friday.

“It’s necessary to take these actions now to improve the company’s financial strength,” the company added.

According to the Insurance Information Institute, State Farm was the leading company offering home insurance in California.

The decision to forgo coverage went into effect on Saturday. It applies to both personal and business properties. The company said it will continue to serve existing customers, as well as offer personal auto insurance.

Make no mistake – this policy, if it’s maintained, is a phase-out. They will lose customers, for one reason or another, and they do not intend to replace them. This doesn’t mean that California is uninhabitable, obviously. It doesn’t even guarantee that home and business insurance is no longer profitable in California, but it does mean that a large and successful insurance corporation thinks that it will be unprofitable, in the not-so-distant future. It looks like this year is expected to be more or less normal, as wildfires go, and apparently El Niño years have fewer fires, so hopefully California will get something resembling a break from the fires, but the warming continues, and the insurance industry knows that.

The measure is the latest development in what has been a years-long issue in California: insurance companies dropping homeowners because of the growing risk of wildfires.

In recent years, the state has witnessed some of the most destructive wildfire seasons in its history. In 2018, the Camp Fire destroyed 11,000 homes and at one point, displaced nearly 50,000 people. In its aftermath, insurance companies saw huge losses, causing premiums to go up and toughening eligibility requirements to get covered.

California officials have attempted to minimize such efforts, by temporarily barring insurers from dropping customers in areas hit by wildfires and directing insurance companies to provide discounts.

But as wildfires rage on in the state, so has the issue of insurance affordability and availability. Last year, American International Group notified the state’s insurance regulator that it will exit the homeowners market.

The efforts they mention, by California officials, seem to be a misguided attempt to cling to normalcy. I have no sympathy for the insurance corporations, but our government should be focused on climate change, not the financial tool we’re currently using as a bandaid for it. That means ending fossil fuel use, yes, but thanks to the negligence, corruption, and greed of our “leaders”, we also have to spend money adapting to a warming world. We had a chance to delay or even avoid this, but that chance was squandered, so here we are. Capitalism has no solution to climate change; all it can do is find ways to keep the rich and powerful, rich and powerful. This insurance exodus will discourage people from moving to California, and encourage people living there to leave, but it will do so slowly and painfully, and it will not address the actual problem, or help those people set up in a less flammable location. It’s not a solution, it’s just corporations putting profit first, as they always do. In that regard, one could argue that this is just business as usual; corporations do what they want, and we just have to go along with it.

Our overlords can force us to go through the motions of normalcy. They have the power to do that, and we lack the power to resist.

For now.

But the world is changing, and it’s getting a lot harder to pretend otherwise. It may be that those changes would spur reactionary politics even without the support of capitalists, but that support does exist, and at least part of it comes from their fear of us. The folks at the top have always practiced class solidarity, and have never stopped waging a class war against workers. They’re scared now, to the point that many are actively supporting fascism, because they are seeing solidarity form among workers, and they fear that organized, collective power that follows. That doesn’t mean we’re guaranteed to win, of course, but it should serve as a reminder that victory is not out of reach. With solidarity and organization, we can build the power to resist, and to bring about the scale of change that’s needed, if we want to survive.

Because I’ve been focused on a novel for the last month, the quality of posts has been lagging, and there will be a few more days of that before I go back to normal. Part of the reason that I feel this is necessary is that this blog is currently my only source of income, and it’s not enough. I’m hoping that (assuming AI doesn’t flood the market completely), I can come closer to making ends meet via book sales, in a year or two. If you want me to invest more time and energy in this blog, the best way for you to tell me that, is by signing up at There aren’t currently a lot of fancy benefits, but you’d be joining a rarefied group of people, and proving that you also have excellent taste!


  1. says

    And yet the ones whining about gas prices, insurance prices, car loan interest rates and monthly payments, parking prices, repaire costs, etc. will be the first ones to say, “bicycle lanes are a waste of space!” despite all the places worldwide – including within the US – which successfully opened bicycle routes which are now used heavily.

    It’s not “car culture”, it’s a car cult. The suckers believe the propaganda, and I doubt it’s just ignorance. It’s because they don’t want to admit they were wrong.

  2. sonofrojblake says

    The American government (of whichever stripe) is keen to deny climate change is happening.

    They are also, by global standards, extremely “small government”/anti-interference with the free market – or say they are, when it suits them.

    On that basis I’m surprised they haven’t stepped in and FORCED the insurance market to offer policies in areas affected by climate change.

  3. planter says

    The interesting thing here is that it is a regional pull-out not a decision to avoid extra-risky properties at the urban-wildland interface. Suggests that they see a very general risk rather than something that can be assessed property by property.

    Here in western Canada we just had a crazy early spring fire season because it was dry enough for fires in the few weeks between snowmelt and leaf-out of the deciduous trees. It is unusual (historically) to get bad fire weather that early. A combination of rain and the trees putting out their leaves has damped things down for now, but we are now already on the high end for area burned this year.

    We have seen at least three events in the past decade now where fires were fast moving enough to cause wholesale damage in urban areas (Slave Lake, Fort McMurray, and Lytton) Normally it is just the people who make the decision to live in low-density exurban areas that are vulnerable to wildfire. A quick look at the map should let any insurer evaluate their higher risk. With everyone at risk, it seems that the costs are being spread more widely. Our insurance for, example, for a standard urban house is now up because of the systemic costs of these major events.

  4. StevoR says

    Meanwhile locally turns out that the newly-ish elected state ALP has betrayed most of the voters who support Climate action and for that matter Democracy and esp the right to protest because it has been hijacked by Fossil Fuel company Santos with the “Premier’s” brother being a Santos stooge. So furious about this. Watch :

  5. says

    Yeah, the climate crocks link got at a lot of what i was talking about last month. From what I can tell so far, we should expect some record-breaking storms. Fire might be not as big of a problem as the temperature might imply, since high sea temps tend to mean more rain on land, but we’re entering unprecedented territory. It’s my hope that after two or three years, we’ll get a dip in temperature, and another round of “no warming in x number of years” from the people trying to erase our species.

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