High Risk Climate Locations To Be Shut Off By Insurers

An article in today's  Guardian,  'Climate crisis on track to destroy capitalism, warns top insure',  predicted climate change will bring an end to capitalism. Noting that,

The world is fast approaching temperature levels where insurers will no longer be able to offer cover for many climate risks, said Günther Thallinger, on the board of Allianz SE, one of the world’s biggest insurance companies. He said that without insurance, which is already being pulled in some places, many other financial services become unviable, from mortgages to investments.

Basically, places deemed uninhabitable, or close to it, will be shut out from the insurance market and further investment. 

Günther Thallinger, added  this is bad for the overall financial sector,

“This applies not only to housing, but to infrastructure, transportation, agriculture, and industry,” he said. “The economic value of entire regions – coastal, arid, wildfire-prone – will begin to vanish from financial ledgers. Markets will reprice, rapidly and brutally. This is what a climate-driven market failure looks like.”

For years I have been talking about how climate change will devastate certain areas and encourage climate migration. The inability to buy insurance and a dearth of investment to a local  is going to devastate certain parts of America and the world at large. More publicity like this will push people to move and create a self-fulfilling prophecy.

Climate Migration and Insurance

For  years I have writing about the coming mass exodus of climate migrants from the South and coastal areas to the North. You can read them at  Climate Migration One of the factors besides climate driving this surge will be the inability to buy insurance, or paying exorbitant prices for it. 

As climate change begins damaging more regions around the USA and world, risks to insurers will start to rise from having to pay for catastrophes (LA wildfires, hurricanes in Florida...), to seeing the price of housing stocks fall as people begin moving North to escape climate change and the unaffordabilty of insurance (to even the possibility of not being able to buy homeowner insurance). I have noted on several occasions that insurers have abandoned places like Florida.

I mention this because today I read an explaining how a climate catastrophe in one region could trigger a crisis in the insurance market and a larger crisis in financial markets. Here is a link that connects to the article

I’m an economist. Here’s why I’m worried the California insurance crisis could trigger broader financial instability