Insurers are fleeing states due to climate realities

The Hill - All insurers and reinsurers across the globe are adjusting their models, canceling policies and exiting markets. Take the decision by State Farm, the largest insurer in California, not to write any new policies in the state. Why? Because catastrophic risks are rising too fast to insure them profitably. AIG has also taken this same step. These and other risk-sensitive insurers understand that they must stop offering policies to ensure their firm’s profitability. 

The alternative is bankruptcy. Last year in Florida, six insurers went bust and were unable to pay policy owners’ claims for repeated extreme weather disasters. A seventh went belly up in 2023 after the latest Hurricane. The situation is dire in Louisiana, too, where eight insurers went bust last year. If homeowners can get flood insurance at all, the costs are set to just get higher and higher. Ultimately parts of the United States — Miami, the Florida Keys, New Orleans — will become uninsurable.