The technical world of insurance is a critical lens through which to understand the escalating crises in climate change and housing. As climate risks intensify, both public and private homeowner insurance markets face unprecedented pressure, revealing the interconnections between housing affordability, wealth inequality, and the broader financialization of our communities.

Recorded on November 13, 2025, this panel brought together experts to explore the intersection of insurance, housing, and climate. The panel featured Stephen Collier, Professor of City & Regional Planning at UC Berkeley; Desiree Fields, Associate Professor of Geography at UC Berkeley; and Dave Jones, Senior Director of the Climate Risk Initiative at UC Berkeley School of Law. Meg Mills-Novoa, Assistant Professor with a joint appointment to the Division of Society and Environment in the Department of Environmental Science, Policy & Management and the Energy and Resources Group, moderated.

The panel was co-sponsored by UC Berkeley Department of Political Science, the Department of Geography, and the Berkeley Economy and Society Initiative (BESI).

Watch the panel above or on YouTube. Or listen to the audio recording via the Matrix Podcast below (or on Apple Podcasts).

Podcast and Transcript

(upbeat electronic music)

[WOMAN’S VOICE] The Matrix Podcast is a production of Social Science Matrix, an interdisciplinary research center at the University of California, Berkeley.

[MARION FOURCADE] Hello, everyone. The, it’s nice to see a good group on a, on a rainy day. So thank you for joining us.

My name is Marion Fourcade. I’m the Director of Social Science Matrix. So as climate risks intensify, the stability of homeowner insurance markets has faced unprecedented pressure.

Actually, for me, there’s not a month that passes by without someone on my neighborhood email list complaining that they have been dropped by their insurance company and they need an alternative option. Of course, fire insurance is the biggest issue in this area, but elsewhere, it may be flood insurance or hurricanes or– So all of this is making homeownership less affordable. Meanwhile, insurance companies are selling new financial products, so-called catastrophe bonds, to offload the financial risks associated with climate change.

Now, today’s panel was put together by my predecessor, who just entered the room, Cori Hayden, while she was interim director at Social Science Matrix last spring, and I couldn’t have dreamt of a better panel. So thank you, Cori. Thank you for, for being here today.

So we are bringing together experts to explore how the shifting terrain of insurance, finance, and housing can help us understand and perhaps respond to the twin crisis of climate change and economic insecurity. Now, note that today’s event is co-sponsored by the UC Berkeley Departments of City and Regional Planning, Geography, and Political Science, and also by the Berkeley Economy and Society Initiative.

Now, before I turn it over, as usual, you know, those of you who come here often, you know that I always mention the upcoming events, upcoming attractions.

So on Monday we have a new program called the Matrix Teach-ins, where we, we bring some favorite teachers to teach one of their favorite lectures. And so I hope that you will come. It’s a very interesting lecture on exploring Oakland through community-engaged scholarship.

And then our last two events of the semester will happen after Thanksgiving. Maximilian Kasy, PhD in Economics from here, and Professor at Oxford, will talk about his books called The Means of Prediction. And Alexis Madrigal will be our Matrix Lecturer, you know, known to many of you through KQED forum and so on.

He will give a lecture on “To Know A Place,” also, I believe, on Oakland.

Now let me introduce our moderator. Meg Mills-Novoa is an Assistant Professor with a joint appointment to the Division of Society and Environment in the Department of ESPM and also in the Energy and Resource Group.

Meg is the Director of the Climate Futures Lab, a hub for social science research on the impact and equity of climate change responses. As a human environment geographer, her research focuses on climate change adaptation and decarbonization. She uses a mix of quantitative and qualitative methods from spatial analysis and quantitative service, to archival research and interviews.

She collaborates closely with communities and practitioners to improve the design, implementation, and outcomes of adaptation and energy transition initiatives that promote inclusion and equity. Regionally, Meg is working with communities across the Arid Americas, including the Andes in Ecuador and the Great Basin in the US. So without further ado, I leave it to Meg, and thank you all for being here.

(audience applauding)

[MEG MILLS-NOVOA]
Thanks for that kind introduction, Marion. It’s so nice to be here with all of you on a rainy day, and the sun’s coming out. So, good signs ahead.

As Marion foregrounded, we’re living in a time of intersecting crises. On one hand, we have a crisis in housing affordability, burdening both homeowners and renters with high costs and pushing many into marginal and risky housing, and some out of housing altogether. Sorry about this.

Back on track. And on the other hand, we have an escalating climate crisis causing many households to face not one climate risk, but multiple compounding climatic risks simultaneously. And homeowners insurance lies at the intersection of these crises.

The US home insurance sector is under intense strain following massive insurance payouts after major climate disasters like wildfires here in California, hurricanes in Florida, flash floods in Texas. This is happening everywhere in the US and beyond. And in response to these disasters, many private insurers are raising premiums, they’re canceling policies, or they’re leaving markets altogether, such as what Allstate and State Farm announced where they would write no new insurance policies in California in 2023.

So in, in the wake of the withdrawal of private insurance, risk is being transferred onto homeowners who are un or under-insured or onto the state, who’s absorbing high-risk policies as part of fair access to insurance requirements or fair plans transferring risk to the public. And often in discussions on homeowners insurance, we largely focus on the homeowner, but this crisis doesn’t just affect them. It also affects the Americans occupying the country’s 45 million rental units, contributing to ongoing financial distress within the rental market.

Just as an example of this, between January of 2023 and January of 2024, insurance on multi-family housing went up an average of 27.7% nationally, with the largest increases in the Southeast United States. And these costs are being passed on to renters, compounding the larger affordability crisis. And this crisis affects many, but not everyone equally.

Insurance is regulated by states, so there’s a hodgepodge of regulatory environments, which we’ll hear much more about today. Climate risks also depend on where you live, and also low-income often marginalized in racialized populations are facing discrimination in the housing, in housing generally, and also in rate settings specifically, often receiving poorer quality coverage at higher costs. So, the US home insurance crisis is not just going to go away and there’s not a simple solution, but today our three panelists are gonna help us contextualize this crisis, understand its impacts, and also weigh its proposed solutions.

So I’m really glad that you could be here with us today, and we’re really fortunate to have three just fantastic thinkers with us. First, we have Dave Jones, the Director of the Climate Risk Initiative at UC Berkeley Center for Law, Energy & the Environment. He was Senior Director of, for Environmental Risk at The Nature Conservancy from January 2019 to June 2021, and a distinguished fellow with the ClimateWorks Foundation.

Dave Jones served two terms as California’s Insurance Commissioner from 2011 to 2018. He led the Department of Insurance, and was responsible for regulating the largest insurance market in the United States. Jones pioneered insurance regulatory best practices regarding climate risk, including requiring insurers to disclose fossil fuel investments, asking insurers to divest from coal investment, implementing climate risk scenario analysis on insurer investment portfolios, and serving as founding chair of the international consortium of insurance regulators focused on climate risk, the Sustainable Insurance Forum.

Jones has testified before Congress, state legislatures, and the G20 Financial Stability Board, and numerous regulatory agencies about the need for financial regulators to a, to address climate change and the risks it poses to the financial system. Jones has degrees from DePaul University and Harvard University where he has a JD and Master’s of Public Policy.

We have Desiree Fields, who’s an Associate Professor of Geography here at Cal, where she is also a faculty associate with the Global Metropolitan Studies and Berkeley Economy and Society Initiative.

She also co-leads an interdisciplinary research group concerned with digital transformations in global land housing and property. She’s a critical economic geographer and urban scholar. Her research, teaching, and public scholarship investigate property, finance, and technology, with a focus on how they reproduce social and spatial hierarchies in the United States.

At its core, her work is about how these processes of economic and technological change unevenly restructure urban space and the social relations of land and housing. She’s also my Friday morning writing buddy, so really excited we can collaborate in this way too.

Stephen Collier is a professor of City and Regional Planning at UC Berkeley. His work addresses a range of topics, including climate resilience and adaptation, emergency preparedness and emergency management, neoliberal reform, infrastructure, and urban/social welfare. He’s the author of Post-Soviet Social, which came out with Princeton in 2011, and with Andrew Lackof, The Government of Emergency, which also came out with Princeton in 2021. His current work addresses fire risk, insurance, and urban adaptation in California, the topic of two articles currently under review, Insurance and the Rationalization of Disaster Policy, and Disorderly Urban Adaptation to Climate Change.

His previous publications on insurance include Enacting Catastrophe in Economy and Society, Neo-liberalism and Natural Disaster in the Journal of Cultural Economy, Climate Change and Insurance in Economy and Society, Governing Urban Resilience with Economy and Society, and The Disaster Contradiction of Contemporary Capitalism in Geoform. So for all of those getting ready for the qualifying exam, this is a great list for you. So just in terms of what we’re gonna be doing together over the next set of minutes before 5:15, is each of our esteemed speakers is gonna spend about 10 minutes really kind of setting the scene for the discussion in terms of how their work has taught, what that has taught them about the insurance crisis.

And then we’re gonna transition to a couple of questions I prepared for the panelists to discuss among themselves, and then we’re gonna open it up to the audience before bringing it out for a final closing question. And with no further ado join me in welcoming Dave Jones.

(applause)

[DAVE JONES]
Well thank you for that very kind introduction. Is this live? Okay, terrific.

I come bearing bad news. The insurance crisis that we’re experiencing here in California and across the United States and globally, is really the canary in the coal mine for the climate crisis, and the canary is dying. Just to set the stage a little bit, last year globally, insurance companies had $137 billion in insured natural catastrophe losses excluding earthquake.

That turns out to be 29% higher than the rolling 10-year average. In the United States, the insured natural catastrophe losses last year, depending on your data source, were about $112 billion. Also exceeding the rolling 10-year average of insured nat cat losses substantially.

So what’s going on? Global temperature rise is causing more extreme and severe weather-related events, which are landing as more severe and frequent wildfires, droughts, coastal floods, river floods, tornadoes, hurricanes, extreme heat. You know, that’s a partial list.

So, climate change is making all of these perils worse, and it’s killing more of us, injuring more of us, damaging more property, and consequently causing insurance companies to have to pay out ever-larger amounts. Climate change is also taking things that didn’t used to be quite so much a problem, and making them worse. If you’d asked insurance professionals 10 years ago were they concerned about severe convective storms, they would’ve looked at you blankly.

Last year, severe convective storms accounted for roughly 40% of the global insured nat cat losses. So what is this? This is temperatures rising, more water vapor staying in the atmosphere, climate patterns changing, large atmospheric rivers sitting over geographies, and heavy rain coming down.

In the United States, although that’s causing flooding, the flooding part isn’t what’s causing the insurance company losses ’cause remember, the private insurers in this country got out of providing flood coverage in the ’60s, so the federal government created the National Flood Insurance Program, but it’s simply the wind coupled with heavy rain causing damages to home that are driving the substantial losses. And the trends are all in the wrong direction. As you know sadly we’re not bending the curve with regard to global emissions fast enough, and so global temperatures are gonna continue to rise and we’re gonna see more of these extreme severe weather-related events landing in various levels of acuity across the United States and globally, and causing more and more payouts for insurance companies.

Now, it’s also true that the insurance companies’ losses are also being driven by our propensity for putting more people and businesses in harm’s way, and I think we’re gonna hear from our other esteemed panelists about that aspect of this crisis. But it is the case that we continue to allow a substantial amount of real estate development in the various areas where these disasters are falling most acutely. And then also, the cost of replacing property has been going up, so that’s also driving insurance company losses.

But I submit those last two things, more people and business in harm’s way and more costly replacement prices, wouldn’t matter as much if we didn’t have more extreme and severe weather-related events landing in these areas. But various experts say about 30% of the phenomenon, at least 30% of the phenomenon’s being driven by climate change. So as Meg alluded to, what are insurers doing?

They’re doing two things, they’re raising price, and they’re writing less insurance. And that’s happening to varying degrees across the United States. It’s not just California, not just Louisiana, Florida, but in the Midwest where severe convective storms are landing, in the New England area where you’re starting to see wildfires occurring, really throughout the United States in different levels of acuity.

So then the question becomes, what do we do about that? And I don’t believe that there’s a magic insurance wand, policy wand you can wave or a magic insurance regulatory dial you can turn to solve this crisis. Fundamentally, what we need to do is to transition away from fossil fuels and other major greenhouse gas emitting sectors and industries reduce emissions, and bend the curve with regard to global temperature rise.

If we don’t do that, then while there are some short midterm policies I’m gonna tick through very quickly in the five minutes remaining to me, and I’m sure we’ll have a chance to discuss these in greater length, that there are some policies that can help in the short midterm. Ultimately, they’re gonna be outrun by the growth in risk that’s occurring as a result of continued global temperature rise. But what are some of the short midterm things we can do?

Well, what Florida’s decided to do is deregulate the insurance market entirely. Their theory is that if they stopped regulating that insurers would then write more insurance. And so what that’s resulted in Florida is rates four times the national average.

It’s also resulted in less adequately capitalized insurance companies writing in Florida. It’s resulted in most national carriers not writing in Florida. And there’s a long list of ways in which Florida has worked to reduce costs and to deregulate their market.

But even so, there’s been some recent uptick in Florida, local Florida companies beginning to write insurance in Florida. We’re just one hurricane away from that market collapsing again. California’s taken a different regulatory approach.

They’ve continued to regulate rates and regulate the financial condition of insurers with some modification. Just last year, they adjusted the rules to allow catastrophe models to be used for rate setting. They allow reinsurance costs in rate setting.

But here too, while that might help in the shorter midterm get more insurance written in California, which by the way is still an open question. There was a New York Times investigative report that was published just the other week that found that notwithstanding the deal that my successor cut with the insurance industry in this regard, non-renewals continue to climb and there’s a bunch of loopholes in the provisions that required insurers to write more insurance in the high wildfire risk areas. So, it’s still an open question how much additional insurance will get written.

But even if more re– insurance does get written in California because of these changes, again ultimately it’s gonna be overwhelmed by the rise in background risk. So I think the policies that we should focus on are ones that actually are directed at the root cause of the problem, right? So certainly all of the panoply of policies around trying to reduce emissions, transition to cleaner sources of energy, et cetera, et cetera.

But in the insurance context, it may surprise you to learn that US insurers have over half a trillion dollars invested in the oil and gas industry. Which raises an interesting question: Why is the insurance industry investing in the industry whose emissions are the major driver of the climate change that’s causing an existential crisis for the insurance industry? And why are the insurers allowed to keep investing in those industries?

And I submit to you they shouldn’t be allowed to do so, and that states ought enact legislation requiring insurers to transition from their investments in fossil fuels as well as transition from their writing of insurance for fossil fuels as a way of contributing to the transition. Insurers also have an opportunity to invest in new technologies that are aligned with and that support the transition, so there’s an opportunity for them to play a role there too. It also turns out that every insurance policy written in the United States and globally has what’s called a right of subrogation attached to the contract.

And this right also exists in, in common law and statutory law in, in all the states in the United States as well as many national jurisdictions globally. What the heck is subrogation? It’s a fancy word for, the insurance company gets to stand in the shoes of their policyholder and bring lawsuits against third parties whose action or inactions caused damage to the policyholder that then caused the insurance company to have to pay out.

The most notorious example of this is when the insurers sued PG&E for starting the Camp Fire, you know, which killed 86 people, destroyed 16,000 structures, caused about $12 billion in insured losses. And the insurers exercised their right of subrogation, standing in the shoes of their policyholders to sue PG&E, to hold PG&E accountable for starting that fire. So given that insurers have a right of subrogation and they could be bringing subrogation claims against the oil and gas majors for their emissions contribution to the very climatic events that are causing insurance company losses, do you think any insurance company has done that?

Well if your answer was no, you’d be correct. So there are things though that states can do to nudge, push, and even require insurance companies to bring subrogation claims. And I’ve been socializing this idea for the last year.

The New York Times was kind enough to publish an op-ed shortly after the LA Wildfires, the title of which was, Who Should Pay for the LA Wildfires? And my answer was, well, in part, it ought to be the oil and gas industry. So those are some of the policies that could be, and there are others, that could be directed at insurance companies to help further the transition and actually hold more accountable at least one of the major sectoral emitters.

There’s also another issue which I’m sure we’ll get into as well, which is that there’s a tremendous amount of very important investment in adaptation and resilience. And so in the wildfire context in California, this is home hardening in defensible space. It’s also community fuel reduction efforts, and it’s landscape scale management of forests using prescribed fire and thinning, meaning, mimicking the way that nature used to manage our western forests where fire was a routine part of the ecology, it would burn through.

We’ve had about 150 years of fire suppression now in our western forests are choked with fuel, and then you have temperatures rising, drier conditions, precipitation falling in strange patterns. And so they’re just one ignition away from mega-fires. However, groups like the Nature Conservancy and others, including the State of California, have been spending a lot of effort in deploying management in the forest to reduce wildfire risk, including the State of California, which has appropriated $4 billion for this activity.

HOAs, cities, counties are taxing themselves to do forest management, et cetera, et cetera. So these things demonstrably reduce risk, home hardening, defensible space, forest treatment. But with the exception of maybe one or two insurance companies in this state, none of the companies are taking that adaptation and resilience into account and the models that they use both for pricing and for underwriting.

So that’s something that could be changed as well. States could enact laws that require the insurers to account for investments in adaptation and resilience in the models they use to decide whether to write renew insurance and how to price it. And in fact, I worked with some advocates to pass a law like that in Colorado.

A House Bill 1182 passed just this year, first in the nation, that requires insurers in Colorado, as they use these models to decide who to write insurance for and how to price it, that the models have to account for adaptation and resilience at the property, community, and landscape scale measure. So while I continue to hope, and we can talk about it later ’cause my time is done, that we can convince the insurers voluntarily to take up adaptation resilience, and I’ve done some work in that regard, placing an insurance product in the forest that actually accounts for forest treatment at a certain point I think we have to say enough’s enough. We can’t keep waiting and we can require that the insurers account for these things as well.

And that’s what Colorado has done. So we’re gonna get into a deeper dive, but thanks for the opportunity to do a rocket docket blitz through insurance. This is the part where most people, you know, wanna roll their eyes back into the fronts of their head.

But appreciate your kind attention. Thanks.

(applause)

[DESIREE FIELDS]
Okay. Hi folks. Thanks for the invitation to be part of this discussion. Let me put this up a little bit. I don’t work on insurance. So I feel like a bit of an interloper here. But I’ve already learned a lot from Dave. I feel slightly more terrified now than I did before you shared your comments.

(Desiree laughs)

And as a new homeowner whose insurance premium went up by 65% from last year, I also have a personal stake in this discussion. So most of my work has focused on the dynamics of housing financialization and from that perspective, I have a few points that I think are important to make about financialization and kind of assetisation and housing inequality, and then just a couple of points about how I think this intersects with the insurance crisis. And so the first thing I’d like to emphasize is the subjective hold of the ideology of property over America and how the shift toward asset-based welfare has sort of reinforced the hold of property.

There’s obviously a really long history to the narrative of the property owning democracy in the US, going all the way back to Thomas Jefferson and his vision of like smallholder farmers as hardworking, self-sufficient, morally upright. And similarly, home ownership has long been seen as a way of creating self-reliant and virtuous citizens whose material stake in society solidifies their support for national values and especially for capitalism. The racial politics of property are also important here.

Property ownership is sort of tacitly understood as an entitlement of whiteness that preserves the benefits of entrenched racial power, and the American Dream is of course inseparable from the Homestead Act and ideas of citizenship and belonging. These racial politics have always made access to the benefits of ownership of landed property sort of contingent and incomplete. But even while excluding millions beginning in the mid 20th century, the state also enabled a large-scale expansion of single family ownership through, largely through kind of intervening in the mortgage market.

And so this reality, I think, is really important for how it connects to the agenda for asset-based welfare in which individuals are envisioned as being able to provide for their own welfare needs by investing in assets. Usually that’s real estate. And then kind of banking on the idea that their prices will rise over time.

Now, asset-based welfare has its roots in supply side economics beginning in the 1970s and 1980s, really focusing on cutting taxes, especially taxes on capital gains as a way to promote investment and economic growth. Here, I’m drawing heavily on Melinda Cooper’s recent book Counterrevolution which I think is just really instructive. And I think one of the things that really comes through from that book is how supply siders really framed this agenda of cutting taxes to promote growth as, as something that was good for workers through increasing asset prices.

And this really sort of paves the way for the neoliberalism of, of Clinton and that kind of 1990s era. I’ll come back to this in a moment, but I wanted to say first a little bit about the municipal impacts of supply side economics. So along with national scale tax preferences for benefits including real estate depreciation, cities also got in on the supply side act.

They used tax abatements for property owners to help kind of revive private investment in the face of austerity at the federal level as well as the loss of their industrial base. So they were really kind of using tax incentives to draw investment back to cities in the face of declining federal benefits and trying to kind of revive industry. Cooper offers a really convincing explanation of how these tax incentives for real estate investment essentially work to sort of push up land and asset prices, which makes tax revenues grow even if the tax rate stays low, right?

And this makes cities structurally dependent on asset prices kind of going up and up and up. Of course, this regime of asset price inflation makes housing less and less affordable for regular people, both owners and renters, but it also means municipal governments are less and less able to resolve the housing crisis because they can’t acquire land or housing or build housing at market rates, but rising property values are also their key source of tax revenue, so they’re kind of stuck in this loop of asset price inflation. And even adding new supply can’t, on its own, really help us here, right?

Because as long as housing is a financial asset, adding supply just increases the pool of assets for investors. And by the way, pension funds, including our own are really a huge source of appetite for these real estate assets, and just an incredibly consequential driving force of financialization over the past several decades. So in tandem with this move towards supply side economics, the long-term retrenchment of the welfare state started by Reagan, really continued by Clinton shrank and conditionalized the social wage at the same time as real wages largely stagnated or declined and pensions offered by private employers dropped off.

And these processes really fundamentally changed our relationship to risk, to debt, and investment. So today, exposure to financial risk is really just widely understood as a requirement for present stability and stability into the future, and we have embraced asset accumulation as a way to protect against the precarity that we all experience under neoliberalism. So the notion that assets are the optimal way to achieve financial freedom and to safeguard against income shocks really operates as a kind of regime of truth that is normalized in our everyday lives.

And so this idea is the foundation of asset-based welfare, which is embodied in Bill Clinton’s nearly simultaneous rollback of welfare benefits and rollout of a national homeownership strategy which sought to increase homeownership amongst low and moderate income Americans and minority Americans. So by the late 1990s, we see this consensus across Democrats and Republicans that through expanding cheap credit, government can help everyone be an asset owner, and then that way everyone can benefit from asset price inflation. So asset appreciation really becomes this core economic policy and also central to popular economic subjectivity, right?

Even as racialized lending practices undermine the promises of asset-based welfare for the very groups that are at this nexus of welfare restructuring and efforts to promote homeownership. Okay, so I know this all sounds very far from insurance, but I think I’m gonna try to bring it back. And so here I’ll say two things.

The first is that while the 2008 crisis really did create a tremendous dislocation in housing prices, this was a very temporary dislocation. The average unadjusted sale price of a home in the U.S has increased by roughly 60% since the 2000 peak of prices and has nearly doubled since the prices were at their lowest in 2011. And so these rising prices mean that we are now confronting the limits of inclusion into that regime of kind of asset-based welfare and asset price accumulation, or appreciation.

Right? So you can see this very clearly in the rise of rent-to-own companies during the pandemic era real estate boom. But the structural factors underlying asset-based welfare have not really gone away.

We remain kind of on our own with a very much shredded safety net, right? And the subjective hold of property ownership remains, and this manifests in different ways. So some people overextend themselves to buy in high-cost areas.

Hi, that’s me. Or you know, move out to, you know, the edges of the region, so people who move out to Brentwood, Antioch, Oakley, Stockton, et cetera. Others continue to rent in expensive markets but invest in real estate in more affordable, often climate-vulnerable places like the Sun Belt.

Still others relocate from high-cost coastal real estate markets to become homeowners in these places. Meanwhile, wildfires, hurricanes floods have all intensified in frequency and severity, and with that comes increasingly high insurance costs. And so the climate crisis means that while the U.S homeownership rate is around 65%, so roughly two-thirds of the country own their own homes our most valuable asset and our largest source of collateral is both increasingly materially vulnerable to the impacts of climate change and increasingly unsustainable to insure.

And so here the risk is both to individual homeowners and their current and future asset-based welfare, and also to the municipalities that rely heavily on property tax for revenues as ownership becomes less and less sustainable for people. The second point I want to make draws from the work of Mark Kier and colleagues who work on this really interesting idea called real property supremacy. So this work argues that climate finance in the U.S is structurally biased in favor of shoring up the value of conventional single family homes and homeowners, while excluding or exploiting owners of manufactured homes, and also renters in multifamily dwellings.

For example, infrastructural responses like seawalls are much more likely to be afforded to communities with higher property values, while managed retreat programs are more likely to be promoted in lower-income communities. Whereas owners of single-family homes can draw on their home value to make climate-proofing improvements to their property, owners of mobile or manufactured homes, who are usually kind of locked out of mainstream housing finance, are much more vulnerable to predatory finance if they want to weatherize or climate-proof their property. And renters in multifamily housing often wind up bearing the cost of climate retrofitting in the form of increased rent and utility costs, as well as the higher insurance rates that landlords are paying.

And even when those climate-proofing interventions can increase property values and net operating income for property owners. And so to end, I just want to underline that the insurance crisis and climate finance, more broadly, is really entangled with these deep currents of property relations and social and economic policy in the U.S. Dave argues we wouldn’t be facing this crisis today if we could reduce emissions and kind of bend the arc of rising temperatures. I argue we wouldn’t be facing this crisis today if property ownership didn’t operate as a key form of privatized social welfare, and if our system of property relations were not organized around structural hierarchy.

Thank you.

(audience applause)

[STEPHEN COLLIER]
Okay. Thanks, Dave and Desiree and Meg, and everyone. Okay, great.

So in comparison to these first two talks, gonna take a very low-flying approach to this topic in connection with some work that I’ve been doing recently that relates to insurance and climate adaptation in cities. So maybe this’ll give a different kind of grounding, but maybe also connect to some of these bigger topics. So a central preoccupation for people who think about urban climate adaptation is that it’s really hard to get people to take action on climate change when it involves significant shifts in land use, changes to the built environment, and expensive investments in infrastructure.

And this is true for a couple different reasons. On the one hand, you know, there’s a kind of presentism in both individual and collective action. We tend to discount things that are cognitively distant.

On the other hand, adaptive change often presents costs, and these can be monetary costs. You have to pay to invest in a seawall. You have to pay to harden your house.

They could also be non-monetary. The seawall blocks your view of the water. It changes the landscape around your house.

You’re attached to your tree and your bougainvillea, et cetera. And against this background, one of the things that’s really interesting about insurance, and one of the reasons that I’ve been studying it from this perspective is that it can really reframe choices about adaptive change. And it does so by financializing disaster in a sense that’s a bit different from what Desiree was talking about.

And it’s a sense that I borrow from the sociologists Fabian Muniesa and Liliana Doganova, who understand financialization as a process through which objects are constituted as prone to generating future returns or losses, which is a maybe mysterious formulation, but let me try to explain it by referring to insurance. So if we think about insurance, it financializes disaster in the sense that it brings a sort of uncertain future value of investments of, in adaptation into the present. So for example, an investment in a seawall that may pay off because at some future date there’s some kind of event that it prevents, a flood that it prevents can also produce very concrete and tangible returns in the present for individuals who have better access to insurance or access to cheap insurance.

So it’s from this perspective that we can understand why insurance is actually driving a significant amount of urban adaptation today. But there are different ways that this could happen, and I think they’re quite important stakes of these differences. And I wanna illustrate this point by referring to two cities in California in which I’ve done some work.

One is Foster City, and the other is the Town of Paradise. So first on Foster City, as you may know, it’s located on the peninsula south of San Francisco. It’s built on landfill.

It’s very close to the bay. It is extraordinarily vulnerable to sea level rise. In 2013, the F– the Federal Emergency Management Agency completed a new flood study actually of the whole Bay Area, and one of the things that it showed is that the levees in Foster City, and actually a number of communities around the bay, would not be accredited for protection against a hundred year flood.

And the implication of this was that when the F– the FEMA made new flood maps for the fe– federal, the National Flood Insurance Program, sorry, basically all of the city would be remapped in, to what’s called a special flood hazard area. And as a result all, basically all of the inhabitants of Foster City would have to pay thousands of dollars a year in insurance, where they had not had to pay that before. So the city responded to this by requesting what is called a seclusion mapping designation.

This is sort of a temporary reprieve from remapping by FEMA. And this designation basically bought the city time to reinforce the levees. To pay for this project, city officials put a measure on the ballot that would raise property taxes to back a $90 million bond.

It’s notable that climate change was almost completely absent from public discussions of this measure. Instead, the discussions were about property values. They were about new floodplain regulations that would impose costs on homeowners, and above all, the discussions were about insurance rates which for homeowners would actually be many times more expensive than the property tax assessment that they were voting on would be.

The bond measure passed with nearly 80% support, which is a very high level for a spending measure in California, and the levee project was actually completed last year. So this is, and here’s a picture of The Levee Project. So Foster City is a clear case in which insurance drove urban adaptation to climate change.

It did so, again, by bringing the future value of investments in adaptation into present financial calculations for both residents and for the city government. There are a couple features of this process in Foster City that make it an example of what I would refer to as orderly climate adaptation. First of all, insurance premiums structured incentives in a very clear way.

They established a cost for not acting, i.e. you’re gonna have to pay for insurance. Oops, I lost that. And they also established, Okay.

(presenter chuckling)

I, I don’t know what I did. A benefit or a return on investment. And they did this due to relatively stable translations between insurance rates, risks, and adaptive actions that the city could take.

In this case, the construction of the seawall. The second thing I would note is that the rate map revision process and this seclusion mapping designation established a framework for a planned and relatively gradual process, which actually unfolded over about a decade, for assimilating new risk ratings into the system.

It’s also important to note that Foster City is a very wealthy city. It has ample resources, a really good bond rating, et cetera, so it was a very easy decision for the city to make, to, you know, invest some resources now on a project that would have actually medium and long-term savings for homeowners. The second contrastive example that I want to offer you is Paradise, California, which as I’m sure, basically everyone in here, in the room knows, is a town in the Sierra Foothills that was devastated in 2018 by the Camp Fire, which destroyed most of the houses, I think about 18,000 structures in the town.

So insurance was crucial to short-term recovery in Paradise. There was a relatively small number of people who were able to rebuild immediately after the fire. And it was basically people who had adequate insurance coverage.

Most people did not have adequate insurance coverage. The availability and cost of insurance for reconstructed properties is also a key to the longer, medium, and long-term future of the town. It determines the cost of living in Paradise.

It also determines the ability of new residents to get mortgages. And this centrality of insurance was actually recognized immediately after the fire by community leaders, who focused on how rebuilding could be organized to meet the requirements of insurers. So, for example, just after the fire an organization called the Rebuild Paradise Foundation launched an initiative to help the town and its residents achieve insurability.

In the short term, the initiative helped residents to navigate the insurance marketplace. In the medium term, it advocated for the adoption of building codes and landscape mitigation policies that would align with insurance industry standards for fire safety. But there was a problem.

And the problem was, as they’ve alluded to was that the insurance industry at that time, and in many ways, to the present day, didn’t have clear standards and practices for translating building characteristics and landscape mitigation treatments into insurance pricing and availability. So what developed in the subsequent years was the following situation. On the one hand, Paradise became a real standout in California and nationally in terms of its building codes and mitigation standards.

The physical and built environment in the town has been dramatically transformed. So it used to be a densely forested place, and it now looks like this. So a really dramatic transformation of the built environment.

On the other hand, and I took these photographs a couple months ago in Paradise.

So on the other hand, as has been the case in many high fire risk areas across the state, the insurance market in Paradise has been in a sustained state of distress, to put it mildly. So policies in the admitted market, if they’re available at all, have been many times more expensive than they previously were. People are paying, like, $15,000 and $20,000 for policies.

Most residents are insured today through the residual plan, the FAIR Plan, or many are going without insurance all together. And today’s city officials and community leaders see insurability as a fundamental barrier for reconstruction, which is actually going quite slowly. We’re now eight years after the fire, and about 30% of houses have been rebuilt in Paradise.

And in the medium and long-term, this is actually an existential matter for the city. Paradise is covering ongoing deficits in the city budget by drawing down settlement money that it received from PG&E for the utility’s role in the fire, and so they, basically reconstruction has to proceed fast enough that the property tax base recovers before that money runs out. And so they’re on a very short timeline in which this question of insurability is essential to reconstruction, which is in turn essential to the future of the town.

So in Paradise too, climate adaptation pathways are being driven by insurance, but with very different dynamics from Foster City. So first, in Paradise, and in the case of insurance for wildfire risk much more generally we don’t have these clear translations between insurance, risk, and adaptive actions that either individuals or communities can take. The insurance industry is still very much working out its views on fire risk and on the value of mitigation in reducing that risk.

Second, in the case of Paradise, there was no well-structured and deliberate process for assimilating changes in risk assessment or asset valuations, and said, we see these very sharp shifts that followed the fire, but also the breakdown in the California admitted insurance market that have produced what I would refer to as a disorderly process of climate adaptation. This is a process that unfolded first through the wildfire itself and then through the meltdown in the admitted market for homeowner’s insurance. And it’s had some serious consequences.

It’s resulted in the permanent displacement of a very large percentage of the people who lived in the town before the fire, and a very highly uncertain process of reconstruction that may or may not result in the town ever recovering to its former size.

So I’ll stop there, and I’ll just conclude by saying that I think that there’s one, one of the issues that I think is interesting to talk about is how we move from this very generalized concept of climate crisis to a more institutionally and analytically specified notion of what this actually looks like, and maybe these are some good starting points. Thank you.

(audience applauding)

[MEG MILLS-NOVOA]
Thank you, everyone. That’s like a moderator’s dream. Everyone was so on time and so prepared, so thank you.

You made it really easy on me. So I think that this has been a little bit implicit in our conversation, but I wanna really make it clear what the stakes are of the insurance crisis, and I was, I wanted to ask our panelists, like, what happens? What is the impact on policyholders, on renters if we don’t figure out a way to attend to this insurance crisis?

What does that look like?

[DAVE JONES]
So, you know, as Desiree pointed out in her excellent talk, a big part of people’s assets and wealth in this country are tied up in their homes and physical property. So the implications of the climate crisis or the insurance crisis don’t stop there. There are flow-through systemic risks across the financial sector and into the real economy.

I’ll give you one example. Jerome Powell, the Chair of the Federal Reserve System, no climate hawk he, testified about four months ago before Congress that in as little as ten years in this country, there’ll be parts of the country where you can’t get a mortgage because of the price or unavailability of insurance. So to get a mortgage in this country, you have to have insurance.

If you can’t afford insurance, then you can’t get a mortgage, or if you can’t find insurance, you can’t get a mortgage. And even if you have a mortgage and you end up dropping your insurance ’cause you can’t afford it anymore, every mortgage contract has a provision in it that says that the mortgage lender can force place insurance on you. And guess what?

The force placed insurance costs dramatically more than the insurance you couldn’t afford, which is the reason why you dropped the insurance in the first instance. So there are, there are flow-through impacts of this, of this crisis to credit markets, both for home lending, Desiree also talked about the impact, or Meg talked about the impact on multifamily housing. You know, there was a study done by the Minneapolis Fed a couple months ago that looked at the impact of insurance pricing on both market rate and permanently affordable housing.

Market rate housing, they’re shoving it into the rents, which has consequences then for low income and other people trying to rent. But for the permanently affordable housing where the rents are restricted in terms of how much they can be raised, those owners and operators don’t have the ability to pass on those insurance costs, so it then raises the possibility of more defaults or non-payments of loans that permanently affordable housing developers have gotten, and that has implications for anyone’s appetite to do more permanently affordable housing as well. And then I guess the final point is that the Dallas Fed did a study looking at geographies in the United States where insurance price is going up, and not surprisingly, they also found coincidently an increase in mortgage defaults and mortgage delinquencies, because as the price of insurance goes up, people can’t afford it,

And so then they default on their mortgage. So, so the implications of this are really bad. Now, it’s also possible that we could have a number of severe catastrophic events occurring relatively close in time across different geographies of the United States that would cause a number of insurance insolvencies to happen, right?

Now, that’s a lot less likely. I think instead we’re just gonna have a slow, steady slide into the abyss, economically. But there is also this outside risk that you could have a number of catastrophic events that drive insurance insolvencies, and that has potential flow-through impacts as well to investors in insurance companies, owners and operators of insurance companies.

So, it’s not good news.

[MEG MILLS-NOVOA]
No that came through clearly. Yeah.

(Meg laughing)

Steven, Desiree, do you have anything that you’d like to add?

[DESIREE FIELDS]
Do, I mean, not directly related, but actually kind of building off of Steven’s presentation. I was really struck by the, the ease with which Foster City was able to kind of get agreement from voters on raising taxes in order to, you know, to issue this bond. And it brought to mind Sage Ponder’s work on municipal debt and the kind of like racialized inequalities in muni– in municipal, access to municipal debt markets, right?

And wherein majority Black municipalities systematically pay higher rates on municipal debt than, than other municipalities. And it just kind of, it strikes me that, that is also, yeah, that’s kind of like also part of the stakes here, right? In which some geographies are going to have an easier time of adapting in an orderly way than others, and that also has implications for mortgageability, insured, insurability, and so forth.

[STEPHEN COLLIER]
For sure.

[MEG MILLS-NOVOA]
So I just will have time for one more question, then we’ll bring it out to everyone. But, you know, Desiree really laid out some of the important historical antecedents, but I wanna also say, you know, what are some other important moments in the past that really set the stage for this crisis, that maybe we don’t always think of as being really important, but that you want people to know in this conversation, that this was sort of how we got here?

[STEPHEN COLLIER]
I mean, one thing to say in the California context is that obviously, and this is something that Desiree was alluding to, is that, you know, we’ve, we’ve had this process over the entire post-war period basically of driving housing into high-risk areas, coupled with an insurance regime that, you know, was sort of underwriting that development in a certain way. And I guess Dave, I mean, has more direct experience with, you know, exactly the attitude about fire risk that was taken, you know, both by insurers in the state, you know, prior to 2017, and by regulators. But I think that we’re now having to sort of grapple with that legacy of sort of underplaying the significance of the risk accumulation process that was going on through that process of development.

I mean, one other point that I would wanna make, just as in the sort of antecedents category, is that, you know, it, you know, the landscape of disaster insurance is very complicated. And we have, we’ve been mostly talking about, you know, private property insurance that is regulated. The Foster City example is actually about a public program, it’s not about a private program.

And I think it’s interesting to note that you have very parallel crises in these two contexts. In both cases, you have a fundamental tension between the norms of affordability and availability. Like, you’re trying to keep it affordable, but you’re also trying to make it available.

And with climate impacts, making those things go together is getting increasingly difficult. And so, I think that it, we really have to think about this, not just in terms of, this is what private, what happens with private insurance, but a more fundamental set of contradictions in the way that we’re managing risk in the context of climate change.

[DAVE JONES]
But what’s super interesting about, about those two examples and, and the point you make about the Foster City example really being driven by a public insurance program, the National Flood Insurance Program in particular, is that the National Flood Insurance Program has provisions in it that actually provide that if a community does things to reduce community-wide risk of flooding–

[STEPHEN COLLIER]
Right.

[DAVE JONES]
–they can get a better rate for their policyholders. Or if they do the kind of things that Foster City is doing, which is to reduce the level of floods sufficiently below, what’s the standard now, one in 100 years, I guess that then there’s not an ob– there’s not a requirement that everyone have National Flood Insurance Policies. So, so what I take away from that is that, versus Paradise, where the community’s trying to make itself insurable, but the insurers have not yet responded to insurability, largely, is that it’s gonna require public intervention, right?

Yeah. We can’t wait for the insurance industry to voluntarily decide that it actually is gonna take adaptation and resilience into account. You would think they would have an economic incentive to do so, but really they don’t.

Because at this point where we are It’s not a market share game any longer. It’s a reduce my insurance to the people that will never make a claim, take that money, and invest it, and make money on the investment side, and avoid expanding coverage to people that might actually make a claim. And so, I don’t think, as much as I’ve worked on trying to get the insurance industry to voluntarily take up adaptation and resilience, they’re gonna get there.

And so that’s why I think we need interventions like the National Flood Insurance Program, where they say, like, you know, ‘If you do these things, then your public insurance price and the requirements associated with it will be adjusted.’ Just like Colorado said on the private insurance side, like, ‘We’re gonna require you to account for adaptation and resilience.’

[STEPHEN COLLIER]
So, although, although for other reasons, the NFIP isn’t working out very well.

[DAVE JONES]
No. I have a whole critique of the National Flood Insurance Program we can launch into, but yeah. But at least, I thought your two case studies were really instructive in terms of sort of public versus private.

[MEG MILLS-NOVOA]
Okay, thanks. So I just wanna thank everyone for being here, and to Dave, Stephen, and Desiree for their wonderful comments.

(audience applause)

(upbeat electronic music)

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