As Climate Shocks Grow, Lawmakers Investigate Insurers Fleeing Risky Areas

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WASHINGTON — Faced with growing losses from hurricanes, floods and wildfires, major insurance companies are pulling out of California, Florida and Louisiana — a shift that threatens to undermine the economies of those states.

Now Senate Democrats are demanding that insurers tell them which places could be next.

On Wednesday, the Senate Budget Committee sent letters to 40 insurance companies, seeking documents that show where in the country those insurers have begun dropping customers, or are considering it. The committee, which has subpoena power, has given the companies until Nov. 17 to respond.

“Climate-caused uninsurability has the potential to trigger cascading failures that undermine our entire economy,” Senator Sheldon Whitehouse, Democrat of Rhode Island and the committee chairman, said in a statement. “With this investigation, we are seeking information about where the dominoes may fall next.”

Banks typically require insurance when writing a mortgage. If insurance becomes unavailable in a particular community, it becomes hard for most potential buyers to purchase a home, leading to a drop in real estate values.

Mr. Whitehouse compared the accelerating withdrawal of insurance companies with the 2008 housing crash, saying a broad insurer pullback “will have similarly grave economic effects.”

He said the investigation aims to give the public “advance warning” if insurers might leave their communities.

But Mr. Whitehouse also wants to highlight the financial consequences of global warming, to put pressure on elected officials who oppose steps to reduce the greenhouse gas emissions that are heating the planet and causing more frequent and extreme disasters.

Republicans in Congress have generally opposed legislation aimed at reducing emissions, and former president Donald J. Trump rolled back more than 100 environmental rules. Officials who have opposed climate action “should be forced to reckon with hard evidence of what their inaction has wrought,” Mr. Whitehouse said.

The letter went to the largest insurers in California, Florida and Louisiana, three states that have seen a significant exodus of insurance companies. Those companies are also among the largest insurers in the nation and include State Farm, Farmers, Nationwide, Progressive and Liberty Mutual. None responded to requests for comment.

In May, State Farm announced it would stop selling coverage to homeowners in California. In July, Farmers Insurance said it would stop renewing some coverage in Florida, where the insurance market faces continued fallout from Hurricane Ian last year. A number of insurers have left Louisiana since a series of major hurricanes hit the state in 2020 and 2021.

The committee also sent the letter to the largest insurers in Texas, whose insurance market is also under stress.

In the letter, a copy of which was obtained by The New York Times, the committee asked insurers to explain how they use climate modeling data to gauge risk, and what that data says about the areas where those insurers do business.

The letter requests “all documents related to your company’s deliberations concerning climate-related losses and solvency.”

Mr. Whitehouse has been using his position as chairman to argue that a warming planet poses fiscal dangers. In June, the committee asked seven large insurance companies about their support for fossil fuel companies, through investments and providing coverage for fossil fuel projects.

A senior committee staffer said the information gathered could help inform future legislation, although insurance markets are primarily regulated by states. The data collected could also help state officials prepare for the withdrawal of some insurance companies, said the staffer, who declined to be identified because he was not authorized to speak publicly.

In California, state officials have moved to make it easier for insurers to increase rates, in return for their agreement to keep offering coverage in high-risk areas. In Louisiana, the state recently approved new subsidies to private insurers, essentially paying them to do business in the state.

Carolyn Kousky, an economist at the Environmental Defense Fund who studies the impact of climate change on the insurance market, said the committee’s investigation could also prompt elected officials to confront painful questions about how and where Americans build homes.

That could lead to tighter restrictions on new development, helping people move away from areas vulnerable to extreme weather, or prohibiting people from building back after disasters in some areas, Dr. Kousky said.

Those ideas tend to be unpopular, but the prospect of the private insurance market collapsing in some areas could prompt officials to talk about them.

“We need a much more radical shift in how we’re thinking about risk reduction and climate adaptation,” Dr. Kousky said. “Some areas are going to become so risky that it’s no longer economical to continue to have structures on them.”

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