Climate change presents a wide range of risks to California’s insurance industry, as Californians across the state contend with unprecedented wildfires, changing storm patterns, increased risks of flooding and sea level rise, and disruptions to business from agriculture to fisheries and beyond. Potential decarbonization of the economy and litigation based on climate-related damages further threaten the insurance business model. The industry faces these dynamic challenges at the same time that insurance products are becoming more necessary but less available and affordable.
To tackle these issues, the California Department of Insurance (CDI), under the leadership of Commissioner Dave Jones, has spearheaded efforts to drive insurers to disclose climate risks, divest of fossil fuel-related investments, and maintain access to insurance in vulnerable areas.
Today, CDI and Berkeley Law’s Center for Law, Energy and the Environment (CLEE), together with lead author Dr. Evan Mills, are releasing Trial by Fire: Managing Climate Risks Facing Insurers in the Golden State, a comprehensive report documenting the nature and extent of the risks and opportunities faced by insurers and residents in California. The report covers:
- CDI’s landmark efforts to date;
- Physical, transition, and liability risks;
- Challenges to insurance affordability, adequacy, and availability;
- The opportunities presented by “green” insurance products;
- Potential legislative and policy reforms; and
- Solutions for industry, regulators, and consumers to preserve a viable insurance industry in a changing climate.
Many of the points covered in the report also dovetail with the June 2018 CLEE-hosted symposium with stakeholders across California’s insurance and climate regulatory communities. Building from this symposium and CDI’s ongoing climate change initiatives, Trial by Fire documents the challenges faced by an industry essential to the fight against climate change and provides a roadmap for California leaders seeking to engage and support it.
The full report is available here.
Video of Commissioner Dave Jones’ press conference announcing 2018 wildfire insurance loss data and the release of the report is available here.
CDI’s press release announcing the report is available here.