What the LA wildfires show about climate change and the future of insurance

In this episode of the ESG Insider podcast we explore climate change and its implications for property insurance through the lens of the wildfires in Los Angeles. 

The fires that broke out in LA in January killed at least 29 people and destroyed or damaged thousands of structures. Early estimates from AccuWeather put the total damage and economic losses at more than $250 billion. 

“Climate change is not the only culprit here, but it is an accentuating factor that made this event and other events more severe than they would have been otherwise,” says Terry Thompson, Chief Scientist in the Climate Center of Excellence at S&P Global. 

We also talk to Gavin Schmidt, Director of NASA’s Goddard Institute for Space Studies, about why extreme weather events like wildfires are becoming more frequent and severe as the world warms. 

"We can prevent the situation getting worse by reducing, in the end to zero, carbon dioxide emissions," Gavin says. "There's really no practical other way to even stabilize the situation, let alone reverse it.”  

And we hear how the insurance landscape is changing in an interview with former California Insurance Commissioner Dave Jones, who is now Director of the Climate Risk Initiative at UC Berkeley’s Center for Law, Energy and the Environment. 

Dave explains that some property insurers are raising prices and declining to write or renew insurance in places that face rising losses from disasters like the LA wildfires. 

“The increase in price of insurance and the increased unavailability of insurance has significant economic consequences for households and businesses,” Dave says. “Insurance is the climate crisis canary in the coal mine, and the canary is starting to expire.” 

Listen to our episode about Canadian wildfires: https://www.spglobal.com/esg/podcasts/how-the-canadian-wildfires-impact-business-net-zero-health  

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This piece was published by S&P Global Sustainable1, a part of S&P Global.           

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