Working people across the country, especially in states such as Florida and California, which are on the front lines of the climate disaster are facing an appalling insurance crisis. 

Many of the expected effects of global climate change are already impacting the US: stronger, more intense hurricanes, longer droughts, and devastating wildfires. By 2050, it’s expected that the amount of land consumed by wildfires in the Western United States will increase by two to six times. Along the South and Eastern coasts, Hurricanes have intensified, characterized by erratic steering winds that often result in slow moving storms that remain “parked” over land, which causes unprecedented flooding. Hurricanes Sandy in the Atlantic and Harvey in the Gulf of Mexico are some of the most recent examples. In the West, we have seen unprecedented wildfires that in some cases have consumed nearly a million acres over the course of months, such as the Dixie Fire in 2021. Despite a period of relatively wet winters in the last few years, climate change makes conditions less predictable.  Severe droughts in the West are almost sure to return, with a larger fuel load available to burn as grasses cure and woods further dessicate.

One of the most devastating effects of the climate crisis has been the destruction of homes, especially in the so-called wildland urban interface in the West, but also in suburban and even urban areas throughout the country. Under capitalism, the only option for working people is for-profit property insurance, which is facing huge losses cutting into their profits.

Insurers Cut Losses

The main purpose of an insurance company is to make a profit for its shareholders. When a single home burns down, they are happy to pay out and reinforce the illusion that they exist to help people on their worst day. But when a thousand homes burn down, they fight tooth and nail to deny claims, cancel policies, limit their losses and renege on their obligations.

In California, three insurers, State Farm, Allstate, and Farmers cover about 40% of the state’s home insurance market. Together, they represent a combined $255 billion in net total assets as of 2023. After decades of profits, all three have started to lose money in recent years due to wildfires. In response, they have revealed their true nature. Rather than spend some of that $255 billion to fulfill their obligation to working people, they have all stopped or severely limited new home insurance in the state. Adding insult to injury, State Farm recently announced that 72,000 existing home and apartment policies would be canceled, many of whom paid their premiums for years without ever having a claim.

Much like California, Florida is also experiencing a massive insurance crisis. Following years of massive hurricanes and floods, the average cost of a homeowners policy has reached $6,000 per year, three and half times the national average. Working families are being forced into impossible situations as a result, forced to try and budget for the increase, or relocate in a housing market burdened by the insurance crisis. Outrageously, Florida’s private insurers turned a $147.3 million profit in 2023, on the backs of working families paying outrageously high insurance premiums. 

In both states, the so-called “insurers of last resort”, Citizens Insurance in Florida and the Fair Plan in California, have exploded in size and exposure. These agencies were created by the state legislatures to offer homeowners insurance to people who can’t afford, or are otherwise unable to buy insurance on the private market due to risk of catastrophic losses (such as wildfires or floods). Citizens Insurance has taken on too many policies, and has been forced by the state legislature to urgently depopulate its books, meaning that hundreds of thousands of people insured with the “last resort” will be forced back onto the private market that failed them in the first place. 

Fair Plan has been characterized as a “ticking time bomb”, with an exposure of $300 billion that far exceeds the paltry $200 million it has on hand. When the next major wildfire hits California, the Fair Plan expects to assess billions of dollars from the private insurers authorized to transact property insurance in the state, which will be levied in direct proportion to each insurance company’s market share. Given the fact that California has experienced $18.7 billion in wildfire related property losses in just the past five years, wildfires in the near future could potentially cause the collapse of private home insurance in the state. Capitalist politicians are scrambling to keep for-profit insurers in their states, an impossible task as climate disaster has decimated their ability to make profits.

Let’s not beat around the bush. The major private insurance companies are in the process of leaving the property insurance industry altogether because it is no longer profitable. After decades of collecting money from working families (most of whom never saw a cent of that in return), they are happy to leave us to face the brunt of the climate disaster while they enjoy massive dividends and bonuses. For working people, losing home insurance coverage often means breaking a mortgage agreement, which can easily cost families their homes.

The impact of the climate crisis on the home insurance industry has definitively exposed the absurdity of the for-profit system in the context of rapidly accelerating property losses. The answer is simple: we need a system that guarantees to either rebuild homes or relocate families at no cost. This could easily be done by appropriating the $255 billion in net assets of just the three largest home insurers. The insurance executives and directors intimately understand this, however, and will wage a vicious, existential battle to protect their profits at our expense.

We Need A New System

Capitalism is a system built on exploiting the labor of working people and the resources of the planet to fuel ever greater profits. In many ways, the accelerating climate crisis represents the ultimate manifestation of the ruling class’ ambition for infinite growth on a finite planet. Whenever this system creates a crisis, it does everything in its power to ensure that poor and working people pay the price while the billionaire bosses continue reckless profit-making. 

We need a mass movement, led by the working class using our economic power to shut down our workplaces, to demand that families receive the assistance they need when they are unable to find insurance at a reasonable price. We must advance the demand to take the property insurance industry into democratic, public ownership that is accountable to the working families that are forced to rely on it. As workers, we create all of the value that the bosses take in profits, and have the power to collectively withhold our labor to shut down their system and win our demands.