One month into the second Trump administration, and already Trump has made his priorities clear: Looters and polluters reign, and their feeding frenzy comes at the expense of working families, Mother Nature, and our collective future.
Families are getting squeezed by climateflation, from grocery staples to insurance prices to shipping costs, all rising as the result of climate change, disrupting agriculture, weather, and transit.
Then comes the danger to our entire economy. Climate change is perhaps the biggest systemic financial risk to our economy, and thus to families’ personal finances. And where is this coming true first? In the insurance markets.
The leading edge of the economic damage from our failure on climate will come through the insurance industry, which is legally obliged to look at the actual predicted future, not fossil fuel/Republican propaganda.
First and worst is Florida, where the insurance market is already reeling. The brutal damage from the LA fires may actually move California up to the “worst state” spot for homeowners insurance. We’ll see.
Both have state-backed insurance plans of last resort. Rhode Islanders have seen this: remember RISDIC, and how useful that was when disaster struck? Or our workers comp state “Assigned Risk Plan,” which actually drove insurers out of state.
As Florida and California approach meltdown, Rhode Island is seeing early signs of increased policy non-renewal and climbing homeowners premiums in flood-prone areas. These crises happen “gradually, then suddenly”; we’re still in “gradually.”
(Thank you, Rhode Island insurance agent and Budget Committee star witness Ernie Shaghalian!)
Don’t own property near coasts or wildfires? It’s still your problem. The prediction is a “crisis cascade” from insurance to mortgages to property values to a general economic collapse like 2008. Everybody was hurting after that 2008 mortgage meltdown.
That prediction from the former chief economist of mortgage giant Freddie Mac was based on just a “coastal property values crash”; we can now add to that the evil sibling, risk in wildfire country, which could cause the same cascade.
An uninsurable property is an unmortgageable property, which makes it hard to sell to anyone except cash buyers — fine for mega-millionaires, but if you have a mortgage, your home value depends on being able to sell to someone who can get a mortgage.
That can crush home values in at-risk regions, disrupting regional economies, and hitting regional banks, whose solvency is based on loan-to-value ratios. This is serious enough that the Financial Stability Board just issued a warning to banks.
If Fannie and Freddie step back from high-risk mortgages, the problem accelerates. They’re now accepting mortgages based on insurer ratings from Demotech, which has given ratings to 15 Florida insurers that then went bust. Remember ratings agencies in 2008?
Even if it doesn’t go full collapse, when a property’s carrying costs increase with homeowners insurance going from $4,000 to $16,000 (happening in Florida), the property’s value falls. Existing homeowners can be wiped out just from premium increases.
There’s a big difference now from 2008. In 2008, homes were “under water” with mortgages more than the house was worth. But the home had value, which could increase, and the market could get past the “correction” and rebound after the shock.
Now the danger is homes literally under water, and insurance that will never come back, so the “correction” comes, but not the rebound. As painful as 2008 was, it was over in several years. The climate damage we are doing could take generations to repair.
Remember last that we are in this grim predicament thanks to a well-funded, semi-covert campaign of lies, propaganda, dark money, and political corruption, done purposefully by the fossil fuel industry. A massive reckoning is due for that evil.
With all of Trump’s chaos, we can’t lose sight of what’s at stake for our planet. We have got to right the ship.
