https://youtu.be/R23ee2Nm6N8?si=2h8ndMuJKNtBlmj3&t=13 

CBS News: This year alone we’ve seen a surge in temperature shifts, deadly floods, and natural disasters, many of which tie back to the effects of climate change.

https://youtu.be/lulUDj_MZdc?si=xFS3-1bobQJ8nP5E&t=4 

6ABC Philadelphia: Wildfires burning on the island of Maui... flames were fanned by wind from a hurricane causing the fire to spread faster than anyone expected

https://youtu.be/lulUDj_MZdc?si=pH4UR1C8cldTfWgP&t=13 

ABC News: We know that Florida’s gulf coast could be devastated. This means down power lines, intense flooding, fallen trees, destroyed homes and businesses...

https://youtu.be/xzp9c7u9Z5o?si=-3_nNAOu13nkZ8x8&t=32 

CBS Mornings: That’s causing a reckoning for insurance companies... They’re now either jacking up premiums for disaster coverage or pulling out all together in places where the risks are now just too high.

Owning a home is a life goal for many Americans. And for generations, home ownership has been a core pillar of the U.S. economy, protected by a little thing called home insurance.

But now, the industry is facing an important new threat - climate change.

For years, humans have continued burning fossil fuels, causing the atmosphere to heat. And this summer, nature responded with a vengeance.

When nature’s fury is unleashed, homeowners expect their insurance to cover their losses, protect their lifetime investments, and make sure they have a place to live after the dust settles. But as these losses pile up, insurance becomes unprofitable, and some insurers are deciding simply to leave risky areas behind altogether. And this could have profound implications for millions of individual Americans, and the American economy itself.

I’m Gabrielle Sierra and this is Why It Matters. Today, could climate change break home insurance?

David MARLETT: If we want to have a resilient community where people can rebuild after a disaster, you have to have a functional insurance market.

This is David Marlett. He’s a professor at Appalachian State University where he runs the Brantley Risk and Insurance Center, a nonprofit which helps with insurance education.

MARLETT: Unless we're going to try to rely fully on the federal government, which I think that's not a wise approach, we need to make sure that people have an affordable source of coverage that helps them rebuild. So it's a critical element of resiliency. And on top of that, if you don't have a functional insurance market, then you can't buy a house because you can't get insurance on it. So when the insurance market doesn't work, not only do you have lower home ownership, it hurts the real estate sector, hurts lenders, hurts the construction center, the whole economic development of the region begins to stagnate.

And there’s a lot to insure. Just last year, Hurricane Ian caused more than $110 billion in losses, destroying 5,000 homes and damaging another 30,000 in Florida. Many of those losses are protected by homeowner’s insurance, limiting the financial risk for people who lose their homes. But not all of those losses are insured - like when they’re caused by floods or earthquakes - making them potentially ruinous for households, and even entire communities.

And while the southeast is particularly prone to disasters, other parts of the country are not immune to extreme weather. In 2020, wildfires in California broke records, destroying more than 11,000 structures and blazing through 4.3 million acres of land. Researchers estimate this cost more than $19 billion in losses, and that between 2015 and 2020, total insured economic losses exceeded $50 billion. Without home insurance, those losses could have rippled throughout the economy.

The severity of these catastrophic events and their increased frequency make them hard to plan for and hard to predict - and therefore hard to insure against.

Gabrielle SIERRA: Can you give me a simple answer of how homes are insured, and by who?

MARLETT: So, most people are going to be required to purchase a product called homeowners insurance. And it's a package policy. It provides some coverage for the home, the dwelling, the contents inside of the home, as well as additional living expenses. So while your home has been destroyed by peril, it'll pay for the cost to live someplace else until that home is rebuilt and you go back in. So that used to be kind of a minor issue. These days, that's a really big issue. You're probably going to have to buy that when you purchase a house. The lender's going to require it. The lender will want to be added to the policy, so in case the house burns down, they're protected from the event that you default on your mortgage.

And the risk could be biggest for middle-class Americans. For these households, home ownership is between 50 and 70 percent of total wealth.

On top of that, spending on housing, like new construction and services, accounts for almost a fifth of U.S. GDP, making it a significant part of the economy.

Not only that, but the U.S. home insurance market itself is estimated at more than $250 billion and is projected to reach more than $400 billion by 2030. To give you some perspective, that’s about the same size as New Zealand’s entire economy.

SIERRA: Okay so let’s say I roll the dice and go without insurance, am I still at risk?

MARLETT: In that case, you'd be retaining the entire risk yourself. But that would be allowed. It would not be a wise financial decision, but some people are being forced into that either because coverage is not available, it's too expensive, and sadly a lot of it is just an education issue. They don't realize that the homeowners policy doesn't cover certain perils like flood and earthquake. And so like what we saw recently in California where you had a tropical storm hitting a densely populated area with wind, flood, and also an earthquake at the same time, the wind's covered under your homeowners, the flood and earthquake are not.

https://www.youtube.com/watch?v=ZLwMAueYu9g 

CBC News: California is reeling from a twin strike delivered by nature over the course of just a matter of hours. The first hit; a historic storm, unlike any other seen in the state, for over eight decades. 

Witness: It’s quite amazing. I’ve never seen anything like this.

https://www.youtube.com/watch?v=CDZhKlPzkio 

WTHR: Well, Hillary is not the only major issue in southern California tonight. The USGS says a 5.1 magnitude earthquake also hit this area today. 

https://www.youtube.com/watch?v=uDP3lW3hzBs 

Future Unity: The largest earthquake in two decades...

https://www.nbclosangeles.com/news/local/hurriquake-flooding-earthquake-insurance-coverage/3210435/ 

NBC Los Angeles: When we have something as crazy as a tropical storm, it sure makes you wonder, you know, am I covered for this?

Homeowners insurance doesn’t cover floods because insurers decided it was too risky more than fifty years ago. So the government stepped in to create a national flood insurance program that coexists with property insurance - but it’s expensive, and according to a study by North Carolina State University, just 4 percent of homeowners buy flood protection. The program is also $22 billion in debt.

SIERRA: To circle back to the basics, how do you put a price on the risk facing people’s homes?

Nancy WATKINS: We do a lot of different things.

This is Nancy Watkins. She is a principal with the actuarial firm Milliman, which works with clients, including the federal government, on managing emerging risks and improving insurance programs. She also chairs the Milliman Climate Resilience Initiative.

WATKINS: We think about the risk of water leaks inside the house, or kitchen fires, or dog bites. And then we also think about the risks from bigger events. We use different kinds of data and different kinds of modeling techniques depending on what kind of risk we're talking about. But we bundle it all together, and that is how the homeowner's premiums are set, the price that the homeowner typically pays.

SIERRA: And how has climate change affected those risks?

WATKINS: The first thing to understand about climate change is that it's not a thing all by itself. Typically, what it does is it interacts with risks that are already there in unpredictable ways. So for example, we already had wildfire risk in California and the west. We are living in a fire adapted landscape and we always have. We've also increased the development in the west, and we've had many years of fire suppression, which led to a buildup of vegetation. What climate change is doing on top of that is creating longer, hotter fire seasons, periods of drought that kill trees which, combined with the other factors that I'm talking about, make wildfires much hotter, much more severe, and much more likely to burn down thousands of homes. The chickens are coming home to roost, in a way that they haven't before. I mean, people who have lived in one place many, many years are now saying, "I've never seen a flood like this before. I've never seen a hurricane like this before. It's never been this hot before." Fire chiefs are saying, "We've never seen fires this big before." 

Important sidenote: like many natural disasters, the effects of wildfire are not distributed evenly. For example, Black, Hispanic, and Native American communities are 50 percent more likely to suffer because of them.

SIERRA: Okay, let’s look at it from the perspective of the insurance industry. How are they seeing the problem?

WATKINS: For an insurance company, in terms of how they're pricing, they're trying to get a handle on how climate change is affecting the risk for next year. But they also have to think about where their markets are going. We are seeing a lot of disruption in markets right now in the U.S., where companies are pulling out of different zip codes, and sometimes even different states, due to typically rapidly rising risk interacting with other factors that make those markets untenable. And I think what we're going to see is as more and more of these markets get disrupted, the disruption itself becomes a current threat to the insurance industry, not just a long-term threat. 

MARLETT: Insurance is fundamentally about the pooling of risk. And so people get together with similar exposures and they put money into an account and then somebody manages that account and pays out losses when they happen. So this has happened for decades, for generations. But in order for that to work, you have to be able to make an accurate prediction for what losses are going to happen going forward. So if you have historical data that you can rely on, you can make some predictions. People pay into that fund based on their exposure, and then when the events happen, you pay money out. So the insurance company basically takes that risk and then they spread it out geographically and over time, and so when the unfortunate few in a pool have a loss, they receive money. But for most of us, we pay the average loss instead of the actual. What's happening now with climate change: one, our predictions are now not as certain. In addition to that, it's no longer spread out like it was before, so they're more frequent and occurring, not just like every other year, every couple of years, now it's a lot in one year - even the more routine things like a thunderstorm. Before, the insurance industry, it wasn't a big deal. You'd have thunderstorms roll across the U.S. and they'd have some claims and it'd be in the hundreds of millions, maybe a billion or something like that. But for the insurance companies, that's not a big deal. But in recent years with the additional heat in the atmosphere, additional moisture, you're seeing thunderstorms now become a significant event and more frequent. So that just eats up more of the money that's in the pool, and then when you add the other perils, like a hurricane on top of that, the system just breaks down.

For the non-insurance nerds out there: insurance companies have historically been very good at pulling in more money than they pay out. The problem is that climate change is now shifting that math. And in some regions, the math is no longer showing that it’s viable to offer home insurance at all.

In 2021, a survey found that 60 percent of insurance risk managers thought that climate change would make some areas uninsurable. And this year, the president of Aon, a risk-mitigation consulting firm, testified before Congress that climate change is already “destabilizing” the insurance industry.

Though we’re very used to it, the insurance industry isn’t a government agency that’s part of the American social safety net.  It’s a private, for-profit field. So when profit disappears, the system can fall apart. 

SIERRA: So this feels very specific to certain regions. Why should someone care if they're not in that region? 

WATKINS: I think we should have all figured out by now with Covid that everything is connected, and we are all connected to each other. And we might not be able to predict exactly how we're connected, but we are. If a certain market collapses and becomes unlivable, people are likely to move away. Where are they going to move to? That's one question. If you're living in a desirable area that's climate friendly, you might be inundated with new people who want to live where you live. That's an impact all by itself. 

According to the Census Bureau, in 2022, more than 3.4 million Americans were forced to flee their homes because of weather disasters. Of those, more than a million were forced to leave their homes for over a month. And none of this shows any sign of slowing down. After a disaster, people need a place to go, and this can put a strain on a town or region offering supplies and shelter. And if insurers can't or won’t cover damaged homes, stays will be extended even further, putting even more of a strain on the system.  

More and more frequently we are seeing the government step in to fill a gap where private insurance cannot or will not. Some states, like California, Florida, and Louisiana, offer state-run insurance programs, but they are usually more expensive for homeowners. The federal government also runs some disaster relief programs through FEMA.

All of this may sound like a good plan B, until money starts to run out. 

WATKINS: If you have a situation where a state is hit by disaster after disaster, and the risk of those disasters is not transferred into the private insurance and reinsurance market, it falls back on the government. Now, how it falls back on the government is very specific to whether we're talking about floods, or fires, or hurricanes, and where we're talking about and what kind of mechanisms they have. But in general, who gets to pay for these disasters? Other people. And right now, we have a situation where disaster aid, which is extremely logical to go in and help people who have been impacted by a terrible event, it's increasing. Like the need to pay out more and more is what we are seeing and will continue to see. The issue there is, at some point, there's just not going to be enough money, and the areas impacted by these events are not going to be able to pay for themselves. 

https://www.nbcnews.com/politics/white-house/biden-wants-extra-4-billion-disaster-relief-bringing-total-request-16-rcna102933  

NBC News: Tonight, growing concerns FEMA could run out of money before we even hit the peak of hurricane season.

https://winknews.com/2023/09/01/femas-relief-fund-running-low-amid-surge-in-natural-disasters/  

Wink News: The FEMA’s relief fund is running low, so low that the Biden administration asked Congress for an extra $4 billion after a surge in natural disasters like Hurricane Idalia.

https://winknews.com/2023/09/01/femas-relief-fund-running-low-amid-surge-in-natural-disasters/

Wink News: That’s a short term solution, not sufficient for dealing with on-going or future disaster relief efforts.

Yup, FEMA is already running out of money. And as the Atlantic hurricane season peaks in September, the agency’s disaster relief fund projected that it would soon have a $5 billion shortfall.

SIERRA: What are the chances that the government can or will tell people not to move back into risky areas after a disaster?

WATKINS: There's not enough political will right now to say, "You can't live here. You can't build here. You're driving up future losses by building and living in harm's way.” Right now, we don't have that political will, and so the dollars are going up, and up, and up. As that happens, there is a need to figure out what to do with the rising risk. So it's definitely going to be everyone's problem if there are giant swaths of the country that become unlivable or that cannot get insurance. If banks start to fail, I don't think anybody's not going to be impacted by that.

SIERRA: So then, what’s the solution? How do we keep banks from failing while also making sure that people can get home insurance?

MARLETT: I'd say there's four different ways this can play out. One, right now there's an imbalance between the supply of insurance and the demand. The supply has been kind of cut back and the demand has skyrocketed. So, one option is maybe we increase supply, so more people form insurance companies, more investors put money into the insurance markets and that would help. That's happened in the past. It's not happening this time - that's a little unusual. Another option that we might see is, and we should see, is through mitigation to where people try to reduce their risk. You can do it physically like improving your roof from wildfire, you can clear around your property, install sprinklers. There are different mitigation efforts we could take that long-term reduce the risk. 

In this context, mitigation is different from “climate mitigation” which attempts to cut off emissions at the source. When it comes to home insurance, mitigation means taking steps to physically protect your home or community from a climate disaster. And there are lots of long-term ways cities and states are thinking about doing this.

https://youtu.be/-h6G_1yk3l0?si=wJ7fPOb78rThh9xC&t=34 

CityZilla: A couple strategies that cities can utilize to better prepare themselves against natural disasters are things like dry creeks, or sea walls, levees, shelters...

https://www.youtube.com/watch?v=S0oGaoqSAl0 

DW Documentary: Are floating cities one possible answer to the challenges of climate change?

https://www.youtube.com/watch?v=CP7OjOwVjH0 

CBS Evening News: The Dome Home is able to withstand winds topping 200 miles per hour, making it essentially hurricane proof.

https://youtu.be/jursRm7mnQk?si=gyozAjVPp5X1efZL&t=25

Tomorrow’s Build: But instead of constructing big barriers like others have done, China is turning back to nature for the solution, upgrading its cities so that they welcome the water rather than hold it back. 

But it can be hard to get people or agencies to invest in something that requires expensive investment now, when the payoff isn’t coming until later.

MARLETT: I was listening to a speaker from FEMA recently and he said that for every dollar that is invested in mitigation, you save about $6 and reduce losses. So it makes a lot of sense, but you still have to come up with that dollar in the first place for the mitigation. And if you put that burden on the homeowner, it's hard enough to buy a house. Now you tell somebody, "Well, you need to pay some extra in order to put a stronger roof on or better windows and take these trees out." That's a tough sell. Then the other way this plays out is insurance companies can reduce their coverage, so offer lower limits, lower valuations, and the last one, which nobody likes and is probably the most likely is they increase their premiums.

Homeowners don’t like when their premiums go up - after all, who wants to pay more money? But without higher premiums, too many payouts could bankrupt the insurance company. There’s a lot of risk, and that’s where reinsurance enters the picture. Yes, we are now talking about insurance for insurers.

MARLETT: The reinsurance market is one of the largest financial sectors that nobody's ever heard of - it's enormous. They're primarily based in Europe and Bermuda and when an insurance company ... well, this also could be for a state or federal government, they buy reinsurance as well. When they want to transfer that catastrophic element of their risk at the really unlikely but extreme events, they can buy protection from reinsurance companies that will then compensate them if that event happens. 

SIERRA: So what happens to reinsurance if insurance stops giving insurance?

MARLETT: So the reinsurance companies have been trying to cut back on their exposure. So the insurance companies would like to buy more - the demand is there. If you think about it in terms like the insurance companies have an increased demand because people are moving towards high risk areas and just general inflation, especially construction costs. So if it used to cost $500,000 to build a house in Florida or rebuild a house in Florida, now it might cost $800,000. Now you basically have to buy that much more insurance coverage. And so they want to buy more from the reinsurers, but the reinsurers are tapping the brakes saying that, well, they don't have that much capacity to provide that much protection.

And like so much in our modern world, this suddenly goes from an us issue to an everyone issue. 

MARLETT: It's actually really kind of interesting because you spread the risk globally. Let's say we're worried about Florida hurricane risk. You buy reinsurance from a company in Bermuda, they then shift part of that risk to maybe Lloyd's of London, and so now part of it's there. Well, they say, "Okay, we've got part of Florida’s risk. We're splitting with Bermuda. But, however, we're going to reinsure with Munich Re in Germany, and China has started a big reinsurance operation. So we'll send some to China." And so you start to see this risk trickle all around the world, which makes perfect sense. You're taking a concentrated risk and then spreading it geographically, which is what you want to do. And then when there's a claim, basically everybody starts calling in those bills and so the money goes from like back to China, Munich, London, Bermuda, everybody pays their portion and works its way back to the insurance company in Florida, which then pays the homeowner.

Alright so when you buy home insurance, and your insurance company buys reinsurance, little portions of your risk move throughout the world.

But while insuring insurance spreads out the risk for insurance companies, there are other issues that homeowners must face on their own. When faced with the possibility of climate disaster, people may need to move too, and leaving the home you saved for or have made your own is not easy to do.

https://youtu.be/HUQrdFAVV4w?si=lM_cVEghlKz7i0u2&t=402

VICE News: If the government came to you and they said “We’ll give you enough money to relocate.”

Interviewee: It doesn’t bother me if I have to drive through water or walk through water or swim to my house, whatever. I don’t want to leave. 

https://news.yahoo.com/can-the-insurance-industry-survive-climate-change-194042321

Yahoo News: You wanna live on the water you gotta put up with it ya know.

https://www.cbsnews.com/news/after-the-camp-fire-rebuilding-paradise-constructing-for-wildfires/ 

CBS News: Nobody who’s here gave up. There’s a spirit in this town that was here before the fire and it’s here now. And it never went away.

SIERRA: From what I can tell, people aren't slowing down on settling in areas that have a high likelihood of issues related to climate change. My own parents were flooded in Sandy, they moved right back to Manhattan Beach and very little changed. What are the social and psychological challenges in this situation of keeping people from moving somewhere high risk, or coming back after a disaster occurs?

WATKINS: Individual motivation is happening one by one, but there are very strong countervailing forces that encourage people and subsidize the desire to have the American dream; the beautiful house in the woods, the beautiful house on the water. People are still buying into that, and part of the reason that they’re buying into that is that the cost of the future risk is not really priced into their decision-making. It’s not really presented to them as a realistic cost. Development is still being encouraged by states that benefit from the revenues that come from development. 

MARLETT: For people who've purchased a home in an area, they've got a budget and didn't necessarily expect climate change or these different things to happen or these economic conditions, and so if somebody's homeowners insurance premium doubles or triples, that causes obviously a lot of concern. And so, people just can't get up and sell a house right away either because now it might not be as marketable with a high premium. And also, people don't want to leave their home. And when you see a disaster, a catastrophic event, you often have our political leaders show up and talk about rebuilding.

https://youtu.be/PKi7c3xsOxI?si=NYnDQxcrBFDOuy8m&t=334

Arizona News: With federal aid we will begin a massive recovery effort to clean up and begin to rebuild the affected areas of Maui.

https://youtu.be/RMoq-bcxADw?si=uwug157bbTrBpcfO&t=149 

Town of Hempstead: Although it has shattered windows and crushed roofs, it has only strengthened our resolve. Together we will rebuild our homes while building a bright future for our families.

MARLETT: “It's going to be like it was before,” and that's great, but we also have to recognize that, well, maybe we shouldn't be rebuilding like we were before because it just all burned down or was flooded or destroyed in a hurricane. So maybe we can rebuild someplace else or in a different style that would reduce our risk. But that being said, we really don't know how it's going to play out. They're making predictions now and the Midwest seems to be the safe place, but if we're seeing Tornado Alley shift a little bit and now the traditional storms are much more powerful and ongoing, you might see a significant impact even in areas which are perceived as low risk.

When you’re buying a home, you might look online or ask your realtor for the total costs - what your monthly taxes are estimated to be or your HOA fees. 

Another important thing you might want to ask is “what’s the risk of my house burning down?” But that’s easier said than done.

In Oregon, state lawmakers banned insurance companies from using a wildfire risk map to raise premiums or cancel coverage. Now the project is back - but it's called a hazard map instead.

This time, the map is intended to educate homeowners about their exposure to wildfire risk and determine where fire mitigation resources should be prioritized. This could be a very helpful tool for identifying where future rules on climate mitigation will apply for homeowners.

SIERRA: What is the relationship like between the government and insurance companies? Do they work in lockstep? How does it usually work? 

MARLETT: Well, insurance is regulated primarily on the state level, and so it varies state to state. Some states have a very collaborative approach, some states it's certainly more adversarial, and as the companies want to increase premiums, it becomes more adversarial because it's a bad look for regulators and legislators when the premiums are going up. And the insurance industry is not a sympathetic figure. I mean, nobody likes paying their premiums and nobody really appreciates the product until you need it, and so it's pretty easy for the politicians or regulators to vilify the industry. But unless they work together and find a way to make the market function when it fails, then everybody loses. If you look at what's happened in Florida in recent years, I think it's eight or nine insurance companies have gone bankrupt.

SIERRA: Oh, wow.

MARLETT: So a lot of the bigger companies have pulled out. The smaller thinly capitalized companies, if they fail and the big ones decide, "We're leaving Florida," and they're leaving California too, then we go back to the original point of economic development start to grind to a halt. Then the regulators and legislators have to find a solution.

California is a good example of the complex relationship between insurance companies and the states that set out to regulate them. For years California’s government sought to keep premiums low, setting an annual limit on the amount companies could raise prices. But as wildfires and other disasters tore a path of destruction through the state, insurers started losing money - and they weren't able to raise prices to cover their losses. So in the last year, seven out of the twelve top insurance companies left, and homeowners learned that no insurance was worse than expensive insurance. 

Just last week, the state announced the most substantive reforms to its insurance market in almost forty years in a bid to lure insurance companies back - and give people financial protection against worsening disasters. 

MARLETT: And when you see the insurance market breakdown, in those cases where just simply the economics don't work, that's where you see the state and the federal government step in and fill the void. They've done that traditionally with flood, they did it with terrorism after 9/11. So, the federal and the state governments are deeply involved already in the insurance markets. 

WATKINS: The problem is, it becomes unsustainable at some point. That's about where we are now. When we don't have building codes or any land use constraints that prevent individual areas from driving up the risk, and essentially borrowing money from future taxpayers to pay for their desire to live on the water or in the woods, then there's no money set aside to pay for their future risk or to reduce it now. 

SIERRA: Should governments pay for rebuilding in risky areas?

MARLETT: It's a tough question because from the outside looking towards just a purely economic standpoint, it's like, "Yeah, probably not." But if it’s my house and my family, my community, it's like, of course that's the core function of government is to protect us in times of need. So, yeah, they should do it. We just need to be a little more strategic and maybe not as reactionary, a little more forward-thinking.

SIERRA: So what are some policies that could encourage insurers to continue to offer insurance while de-incentivizing risky building?

MARLETT: Well, strengthening building codes. I mean, that's a good way to make sure that when homes are built, that they're going to be able to withstand damage. You can have incentives through the government to use certain techniques, or there's a program in North Carolina that this insurance group uses where they will provide grants for people to put on stronger roofs onto their property.

WATKINS: It's certainly the case that properly targeted mitigation will save money. Typically, though, there's no budget for it. And the ability to do what needs to be done with infrastructure, or nature-based solutions, or whatever, requires a lot of public and private coordination. And many of the communities who need the help the most, have the fewest resources. So there's a real mismatch between who understands the risk, who owns the risk, and who's got resources in order to drive down the risk.

SIERRA: Is it too late to reverse this trend? What's the crossover between climate policies and a strong insurance industry?

MARLETT: I don't want to be too pessimistic on it because humans are creative and resilient and we figure things out when it gets bad enough. So, I think we will find a solution. It's going to probably focus around mitigation, trying to find ways to reduce that risk and perhaps finding a way to have some sort of federal approach that's going to handle the more catastrophic elements of the really severe losses. The big question though is we really don't know the impact of climate change. What's going to happen in five, ten, twenty years.

But even if we don’t yet know the full impact, some countries are already feeling the force of climate change. The UN recently said that rising seas pose unthinkable risks to billions of people across the world. And humans are indeed responding. In the low-lying Netherlands, where that risk is particularly acute, innovators have built giant storm barriers and floating farms - complete with cows - to ward off the worst from a potential sea-pocalypse.

WATKINS: There are lots of different innovations going on. What can we do as a society? The first thing I would say is do the very best we can to understand where we are in terms of risk. That means investing in data modeling, science, education, and trying to communicate that risk to people sooner when they're making decisions. If you can't get affordable insurance, you might do something to mitigate the home's risk, or you might decide it's too risky to live there at all. When someone's locked into a decision, it's a lot harder to get them to change what they're doing. If they haven't built in an area yet or haven't bought in an area yet, it's easier to influence better decisions. I think focusing on insurance as the solution to risk is not properly targeted. Insurance companies are having to pull out of markets, typically because there's too much risk for the markets to bear. And so that often happens because the perception of risk is not communicated properly through building codes and land use planning. We don't have urban conflagrations where a fire starts in a city block, and it just spreads everywhere. That just doesn't happen anymore, but it used to happen. And why doesn't it happen anymore? Because building codes prevent it from happening. That thought process could help us reduce risk that is going to be exacerbated by climate change. But as I told you, the political will, I think to restrict development in catastrophic prone areas is just not there yet. And then, we have to have difficult policy decisions about perhaps moving entire communities that are not going to be able to be saved over and over again. And we also need to find the resources to bring in and help shore up the infrastructure. For example, a city could have better storm drains and better nature-based solutions to deal with rising rainfall. And that could protect the people who live in that city. They don't always have to move away. So it's different solutions for different places.

It’s not too late for change - even in the insurance industry.

Insurance companies can create new products, like policies that pay out before a disaster strikes, allowing homeowners to make fortifications. State insurance regulators can work with governments to determine land-use rules that maximize insurability. And governments can discourage developers from building in risky areas by offering incentives to build elsewhere or prohibiting taxpayer-funded rebuilding in areas at risk of being destroyed time and time again. Of course the best thing to do would be to rapidly reduce greenhouse gas emissions, without which we wouldn't be in this mess.

This issue, at its core, affects the safety and security of people all around the country. Fronting the money for a long-term mitigation plan is a tough sell - asking people to leave their homes and the lives they’ve built there is even tougher. No one solution is going to fix it - and not all are going to be popular. But there are options, and it's clear we need to do something if we want to preserve the nature of home ownership.

SIERRA: Do you see solutions popping up quicker than the escalating problem? What do you think is the next step with all this?

WATKINS: So disruption is certainly happening. It's the reason that you're doing this podcast. It's the reason we've seen all these articles. It's the reason insurance companies are making difficult decisions to pull out of markets that they've invested a lot of money and energy in building up. That kind of crisis does tend to change thinking about what's possible and what's necessary. So having tough decisions to make sometimes means that we do what we should have been doing the whole time.

For resources used in this episode and more information, visit CFR.org/whyitmatters and take a look at the show notes. If you ever have any questions or suggestions or just want to chat with us, email at [email protected] or you can hit us up on Twitter/X at @CFR_org.

Why It Matters is a production of the Council on Foreign Relations. The opinions expressed on the show are solely that of the guests, not of CFR, which takes no institutional positions on matters of policy.

The show is produced by Asher Ross and me, Gabrielle Sierra. Our sound designer is Markus Zakaria. Our associate podcast producer is Molly McAnany. Production assistance for this episode was provided by Noah Berman. Robert McMahon is our Managing Editor, and Doug Halsey is our Chief Digital Officer. Extra help for this episode was provided by Mariel Ferragamo. Our theme music is composed by Ceiri Torjussen.

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