Fire insurance is just the beginning – The Ukiah Daily Journal

In unitary reality, everything is linked, so any assessment of a situation has only a relative “starting point”. In most cases, “onset” occurs when something reaches the point of inevitably becoming conscious. A typical example is the homeowners insurance crisis.

An arbitrary start could be the end of the last ice age, around 12,000 years ago. Atmospheric CO2, functioning like a household thermostat, increased by 50% in a few thousand years, then remained stable. This warmed the planet enough to melt ice caps several kilometers thick, allowing human civilizations to flourish. All recorded history has occurred within a stable temperature range.

A few centuries ago, humans began to exploit stored fossil energy, which living organisms had accumulated over millions of years. Starting slowly, but increasing each year, combustion waste changed the atmospheric chemistry, slowly raising the temperature. Currently, humans have increased atmospheric CO2 content by another 50%.

As the planet warms, droughts increase and fires increase in frequency and intensity. California's fire season is now year-round. A few years ago, a fire burning Redding grew into a tornado, with temperatures reaching 2,000°F. Entire communities have been destroyed. As we continually add more CO2, this problem gets worse.

The fire insurance industry has evolved in more stable times. Historical records were a reliable measure of future events, and insurance rates could be set with confidence, providing a balance between the owner's affordability and the profit motives of insurance companies. However, as atmospheric chemistry changes, the rate of asset destruction increases. Historical records no longer accurately predict future losses. As companies pay more than their premiums bring in, they risk bankruptcy.

In California, regional insurance companies cannot raise rates arbitrarily, but are legally constrained in order to ensure affordability for homeowners, a socialist balance against the normal greed inherent in insurance. Until recently, future risk prediction was not permitted.

Additional pressure on regional companies comes from the fact that they obtain insurance from international reinsurance companies, which necessarily take into account the long-term global reality. Decades ago, they began to notice that the climate crisis was increasing the losses they covered, and they began raising reinsurance rates for regional companies.

With climate-related destruction increasing, regional businesses have found themselves caught between the legal inability to raise their rates locally and ever-increasing reinsurance rates. Rather than going bankrupt, regional companies began exiting the California market. The California FAIR plan is a state-run backup insurance plan, offering more limited and more expensive coverage. However, a significant portion of the funds come from all insurance companies operating within the state. Therefore, if too many for-profit insurance companies leave the state, the FAIR plan will also be at risk.

California has bowed to reality and recently changed its rules to allow for the prediction of future risks when setting rates. This reduces the threat of a lack of available insurance, which could have collapsed the entire real estate industry and the banking system that finances it. Uninsurable properties lose 80 percent of their market value, threatening property tax revenues at all levels of government. Although allowing a rate increase could keep insurance available, it will not necessarily be affordable. The threat of bankruptcy shifts from companies to individuals, without either being socially beneficial.

We pay about 0.4 percent of our home's value in annual insurance costs. Other states already pay 3 to 13 times more. Florida has experienced 5 major hurricanes in the last 7 years. Flood and storm damage is increasing so quickly that the entire state could become uninsurable. Most of the United States has yet to factor growing climate risks into insurance pricing. Rising climate-related claims threaten to bankrupt all forms of insurance, which are beginning to attract more attention.

But adjusting insurance rates does nothing to solve the fundamental problem of deteriorating atmospheric chemistry. Effectively addressing this problem has two components: decarbonization and sequestration. We add more and more CO2 every year. Decarbonization is the process of re-engineering our entire economy to reduce this emissions rate to zero as soon as possible. Sequestration is the process of removing 1 trillion tons of CO2, returning to 300 ppm, a level we know can sustain humanity.

Although canceled insurance gets attention, we must do more to leave a habitable planet for our descendants.

Crispin B. Hollinshead lives in Ukiah. This and previous articles can be found at cbhollinshead.blogspot.com.