study finds more homes without property insurance

“The rising cancellation rates [for property insurance] are part of a broader trend captured by the Treasury Department, which analyzed information for 246 million insurance policies issued by 330 insurers nationwide from 2018 through 2022. The result is the most comprehensive look yet at the effect of climate change on the American home insurance market.” This is what is detailed in this article from the NY Times, More Americans, Risking Ruin, Drop Their Home Insurance

The article goes on to say, “The cost and frequency of insurance claims are rising quickly in the highest-risk parts of the United States, as defined by the Federal Emergency Management Agency, according to the numbers. They show that the financial stress on insurers is also growing. So, too, is the cost of insurance, which has risen far more in high-risk areas than elsewhere.”

While all this is devastating to a homeowner who has a property loss with no insurance, there is also a ripple effect for the governments that can have their tax bases severely impacted, see “The destabilization of the home insurance market doesn’t hurt only homeowners, Ms. Liang said. It also threatens property-tax revenues that communities rely on, since tax receipts can decline if homeowners can’t rebuild or if homes lose value. It also hurts local businesses that rely on homeowners as customers.” One can only imagine how the Los Angeles fires will impact the tax revenues for the areas most impacted by the total destruction of homes and businesses.

Here is just one more anecdotal piece of information. I’ve been a member of USAA for over 50 years. It is a fraternal organization because membership requires a family member to be serving or have served in the United States military—all services. They have something called a “subscribers account.” Basically, I’m sort of a stockholder. Every year in December checks are sent to all members distributing “excess funds” from our individual “subscriber’s accounts” needed beyond those required to be in reserve for things like disasters. Twenty or more years ago, I would receive a check for over $600.00. For 2024 the check was for $270.00. I’m happy to have that money, but you can see the decline in the disbursement of funds---due in large part to disasters (at least that is what I surmise, since the stock market has been on a tear).

Watch for many more stories on property insurance as it relates to cost and availability in the months ahead. California just issued a rule that no one in the fire area can have their policies cancelled for one year. After that…more properties will likely be dropped and some companies will stop offering fire insurance in entire communities.