With rising global temperatures supercharging extreme weather events, desperate homeowners are resorting to non-admitted insurance policies.
According to a Bloomberg investigation, the number of non-admitted homeowner policies has grown significantly, leaving experts concerned.
What's happening?
One of the dark realities of rising global temperatures is more frequent and powerful storms. Homeowners across the U.S. are now bearing the brunt of that reality as devastating storms threaten their homes and insurance policies.
With admitted insurance companies abandoning customers in high-risk areas, such as Florida, California, and South Carolina, homeowners have been turning to non-admitted insurance companies for protection. However, these non-admitted companies are lightly regulated, placing homeowners at risk.
"Conventional companies are backed by what is called a guaranty fund, meaning even if the company goes bankrupt, customers will still get their claims paid," wrote Sophie Alexander and Leslie Kaufman from Bloomberg. "Non-admitted companies have none of those protections."
Data from S&P Global Market Intelligence highlights this trend. According to their reports, between 2022 and 2023, non-admitted home insurance premiums grew around 27% compared to just over 13% on the admitted side.
Why are changing homeowner insurance trends important?
The growth of non-admitted insurance policies underscores the problem of rising global temperatures and extreme weather. As conventional insurance companies find certain areas too risky to back due to more intense storms, homeowners are forced to look elsewhere for protection.
"Twenty years ago, when we talked about a non-admitted solution, it was kind of a dirty word," Florida-based insurance broker Ronald Assise told Bloomberg. "It was this place you go when you can't get anything in the normal market. That dynamic is changing rapidly because of market conditions, and it's not a dirty word at all anymore."
Rising global temperatures and more powerful storms are a direct cause of dirty energy. As companies continue to use non-renewable sources of energy, they emit harmful pollutants into the atmosphere, endangering communities from more powerful storms.
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What's being done about the lack of homeowner insurance coverage?
While non-admitted insurance companies offer homeowners in high-risk areas some form of protection, they do not resolve the overarching issue.
Moving forward, more companies need to transition toward renewable forms of energy to decrease the amount of harmful pollution in the atmosphere. As companies and countries across the globe prioritize sustainability, they can better safeguard communities from extreme weather.
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