Swiss Re: US Has World's Highest Losses To Climate/Weather Disasters By Adjusted GDP; Only Philippines Higher
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Jesse Keenan, a professor of real estate and urban planning at Tulane University, said the result shows how disasters may soon cut into economic growth. “If we think that in the future we’ll have relatively modest forms of growth — 2, maybe 3 percent growth in GDP — and here we’re at 0.4 percent of GDP losses with just these storms and just this one sector, that really starts to cut into our growth,” he said. “It could really become something that reduces our economic prowess.” Keenan noted that the Swiss Re report didn’t capture the full scope of climate-related losses, since it only included property damage. “Particularly in floods, we’ve had auto damages that are close to parity with property losses,” Keenan said.
Americans face another challenge when it comes to severe weather events: getting compensated for their losses. Only about half of the property damages from recent severe weather events in the United States were insured, the study said, and at the same time, large insurers have started halting policies on properties that are in flood- or wildfire-prone areas. Some insurers have stopped offering home insurance policies in California, which has seen numerous large wildfires in the past few years. Others no longer offer coverage for areas that are within a certain distance of the coastline.
The insurance policies that remain have become more expensive. During congressional testimony last week, Jerome H. Powell, the chair of the Federal Reserve, pointed to rising automobile and property bills as driving up overall prices. “That’s been a significant source of inflation over the last few years,” he said. The average home insurance policy increased 21 percent between May 2022 and May 2023, according to the insurance analysis group Policygenius. Some homeowners have begun forgoing insurance altogether — adding to Americans’ overall disaster risk.
Part of the problem is that there aren’t national requirements to prevent building in disaster-prone areas. At the same time, high housing prices and limited stock push Americans to live wherever they can find affordable options. That means funds for infrastructure and housing are being poured into areas that may later be destroyed by wildfire, floods or hurricanes. “We’re setting ourselves up for a fiscal disaster,” Keenan said. “It’s going to be a burden on public debt no matter what way you look at it.”
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https://www.washingtonpost.com/climate-environment/2024/03/16/us-disaster-costs-second-world/
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