Congressman Adam Schiff has penned a letter to the U.S. Department of Treasury Federal Insurance Office (FIO) urging them to investigate how climate change is impacting insurance coverage options for homeowners following the news that State Farm and Allstate will no longer provide new home insurance policies in California.
Chiefly, the letter provides recommendations for potential solutions and calls on the FIO to look into insurance companies’ investments in industries that contribute to the “very climate disasters they insure against.”
It was endorsed by Public Citizens and signed by Representatives Zoe Lofgren, John Garamendi, Barbara Lee, Judy Chu, Tony Cardenas, Jared Huffman, Ro Khanna, Julia Brownley, and Salud Carbajal.
The letter also requires that insurers with over $100 million in annual premiums disclose their fossil fuel investments to the FIO and Congress.
The lawmaker’s letter said, “We write today regarding recent announcements from State Farm and Allstate that these insurers will no longer offer new home insurance policies in the state of California.
“These announcements by State Farm and Allstate— the state’s largest and fourth largest property insurers, respectively— are alarming.
“These actions will impact countless families and small businesses throughout California and threaten the livelihood of communities and economies in already vulnerable areas across the state.”
State Farm announced it would cease to underwrite commercial and residential property in the State of California in late May, citing exposure-related issues and a challenging reinsurance market environment.
The letter continued, “Over the last few decades, the occurrence of natural disasters has dramatically increased. The climate crisis is bringing about unprecedented heatwaves, droughts, and hurricanes. These disasters have grown exponentially more frequent, deadly, devastating, and expensive.
“We have now reached a point many have feared. Working-class families, first-time homebuyers, and small businesses in climate-vulnerable areas across the country must now grapple with higher rates, restricted coverage, and an increasingly smaller pool of insurance availability.
“…The climate crisis is an existential threat and if left unchecked, will bring about disastrous consequences for our environment, food and water supply, and the American economy.”
The letter went on to say, “Congress and the Biden Administration must be aggressive when it comes to our climate and investments in sustainability and a new, green economy. We must use every tool available to protect lives and livelihoods from these horrifying natural disasters.
“While insurers like State Farm and Allstate limit coverage for homeowners and businesses in California, they continue to simultaneously invest in the very industries that fuel these catastrophic events.”
The letter concluded, “It is vital that the data inform a report with recommendations on how to maintain access to affordable insurance and maintain equitable insurance markets.
“Through its advisory role, the FIO should also identify and analyze potential risks that climate-related turmoil in insurance markets could pose to financial stability.
“Furthermore, we request that the FIO require insurers with more than $100 million in annual premiums disclose their investments in fossil fuels to the FIO to be subsequently reported to Congress on an annual basis.
“We also request that FIO investigate these insurers’ green assets, such as renewable energy generation, to support a transition towards supporting a sustainable, decarbonized economy.”
