A recent Treasury Department report reveals alarming trends of rising insurance costs in regions most affected by climate-related natural disasters. The report, released Thursday, shows that premiums for homeowners living in the 20% of zip codes with the highest expected annual losses averaged $2,321, a 82% increase from those living in lower-risk areas.
The study, covering 2018-22, found that there were 84 disasters costing $1 billion or more, excluding floods, which caused a combined $609 billion in damages. The cost of homeowner policies rose 8.7% faster than the rate of inflation during this period.
Those living in high-risk areas faced higher premiums and nonrenewal rates, with insurers paying average claims of $24,000 compared to $19,000 in lower-risk regions. In some areas, claim frequency was 20% higher than the national average.
The report highlights a growing concern for American families as climate-related events become more frequent and costly. Treasury Secretary Janet Yellen stated that the rising costs of insurance threaten the long-term prosperity of families.
As rescue workers battle raging wildfires in the Los Angeles area, the Treasury Department’s findings underscore an ongoing serious problem. The report reflects an alarming trend of rising insurance costs, a challenge that will likely continue under the new administration.
Source: https://www.cnbc.com/2025/01/16/home-insurance-costs-soar-as-climate-events-surge-treasury-dept-says.html