Can you insure against climate change? Some US insurance companies no longer believe so. In the first US states, they are completely withdrawing from the property insurance market. After climate disasters, many victims are left bearing their costs. Umair Irfan reports from Washington on the consequences for homeowners, communities and state coffers.
Should solar geoengineering be considered as a last resort to address the climate crisis? This question was recently debated by states at the 6th UN Environment Assembly. While some states advocate for an examination of the risks and consequences, others fear opening Pandora’s box and weakening the existing geoengineering moratorium. Meanwhile, start-ups and government funding threaten to establish initial facts, reports Urmi Goswami.
There was also disagreement at the 13th WTO Ministerial Conference. WTO members are divided on whether climate issues should be debated within the framework of the World Trade Conference. Today, we introduce you to WTO Director-General Ngozi Okonjo-Iweala, who is fighting for greener global trade and sees trade policy as a means of climate action.
Another round of torrential downpours across the West Coast of the United States is raising water levels, triggering mudslides and renewing alarm about the future of property insurance across the country. In California, which has seen some of the most severe rainfall recently, the majority of residents suffering from floods will not have their losses covered by insurance.
In several states, including California, Florida and Louisiana, private insurance companies have recently terminated their current policyholders. They are not issuing new contracts or withdrawing from the market altogether. Without insurance, most banks will not lend money to potential homeowners or businesses for property purchases. This also slows down economic growth.
Due to the withdrawal of private companies, some states are establishing their own insurance companies. Although intended as “insurers of last resort“, these state-run entities, such as those in Florida, are becoming the largest insurers and often the only option for people living in high-risk areas. However, these companies also have their own financial problems and are increasing their premiums. California is now revising its regulations in hopes of enticing companies back. But insurers are still leaving.
The question is driving significant decisions, such as:
The property and casualty insurance industry in the US is worth almost 900 billion dollars. The sector has faced extraordinary stress in recent years due to disasters, many of them worsened by climate change. In 2023, during the hottest year ever measured, the US faced a record 28 separate events – including floods, cyclones, and wildfires – that resulted in at least 1 billion dollars in damages each.
But more costly disasters aren’t the only challenge for insurers; the amount of people and property in harm’s way is growing too. More than 40 percent of the US population lives in a coastal county, and as more people move in, they are building more homes, businesses, and factories that could be damaged by hurricanes and floods. More people are living in high fire risk areas as well, often drawn by cheaper real estate.
Another difficulty is that most property insurance in the US is offered by private companies regulated at the state level. That means insurers have to comply with different regulations in every state, making it harder for them to distribute risks across the whole country.
State insurance commissioners set rules for what insurance companies have to cover and how much they are allowed to charge. Some even prevent insurance companies from considering future climate change in their risk models. But with more property in danger and more damaging disasters looming, some insurance companies say they can’t stay in business without cutting their coverage or raising prices for their customers.
The big exception to the private property insurance model is flood insurance. The federal government’s National Flood Insurance Program provides more than 96 percent of flood coverage in the US since almost no private company can take on the risk. Flood insurance premiums are subsidized so more people can afford them, but that means the program pays out more in damages than it makes from its policyholders. The NFIP is currently more than 20 billion dollars in debt. Subsidized flood insurance has also created situations where people end up rebuilding their homes over and over in the same spot after a flood. One percent of homes account for 25 percent of claims under the NFIP.
Herein lies the dilemma: If an insurer focuses on making its policies affordable, it may not make enough to cover losses as disasters get worse, as the NFIP shows. If it focuses instead on properly pricing the risks from climate change, its products will be too expensive for most people to buy. And if it can’t raise prices, it will drop its customers.
As for homeowners, most are holding their ground even as disaster risks grow. When the NFIP began to revise its flood maps and raise premiums in 2021, hundreds of thousands of their customers let their insurance policies lapse rather than pay the higher rates. If a disaster strikes, they are uninsured.
There’s no easy answer to the insurance industry’s ongoing crisis, and the ultimate solution demands difficult decisions about who receives protection, who is forced to move, and who gets left exposed when the next calamity lands.
There will still be no structured global debate on the potential use of geoengineering techniques. At the 6th UN Environmental Assembly (UNEA 6) in Nairobi, Switzerland failed for the second time with a proposal to initiate a discussion on measures of solar radiation modification (SRM) in an international forum. After nearly two weeks of negotiations, the United States, Saudi Arabia and Japan opposed establishing a universally accessible knowledge base at the multilateral level.
Solar radiation modification (SRM) is an umbrella term for geoengineering technologies that would reflect more sunlight into space or block the sun thereby masking the heating effect of greenhouse gases. It is among the techno-fixes suggested to limit temperature rise to 1.5C above pre-industrial levels.
In a draft resolution submitted to the UN Environment Programme (UNEP) in December, Switzerland proposed a initiating global assessment of the risks and uncertainties of solar radiation modification technologies at the Sixth UN Environment Assembly (UNEA 6). An expert group doing the assessment would identify SRM technologies, detail the current state of science, activities and experiments, and impacts on the environment, biodiversity and economy, and ethical considerations.
Switzerland argued that despite decisions under different environment-related conventions and protocols to limit use of geoengineering, several countries were investing in SRM technologies and undertaking assessments. However, there was no global assessment of potential implications, risks and uncertainties, which are likely to be far greater than benefits, of these technologies. Switzerland said the proposal was not to promote or facilitate SRM deployment. Instead, it was to address the global assessment gap through a process under the UNEP, a trusted source in which all countries are equal stakeholders.
At UNEA4 in 2019, Switzerland proposed a global assessment of potential risks and benefits of geoengineering technologies for a stricter governance framework. As in UNEA6, the proposal was withdrawn because of strong opposition by the United States, Saudi Arabia.
Countries differed on the proposal’s operational aspects – how information is collected, which institution collects it and how it is presented – and on the gamut of risks and impacts to consider.
The global assessment would be based on the precautionary principle. Countries differed on their understanding of this principle.
Consensus in Nairobi was hindered by a lack of trust. Developing countries, especially the African group, Mexico, and Colombia, viewed a proposed SRM assessment as an attempt to undermine the existing moratorium or give the green light for deployment. Their concerns were confirmed by the European Commission’s expected request to the Group of Chief Scientific Advisers this fall, their scoping paper, and the report from the White House Office of Science and Technology Policy.
The unauthorised SRM experiments by US start-up Make Sunsets that resulted in a ban on geoengineering experiments in Mexico, and other proposed experiments added to the distrust. The Africa Group insisted on a “non-use agreement”. Just last year, the Overshoot Commission of experts recommended advancing research on SRM but imposing a moratorium on large-scale deployment.
Civil society observers too felt that the proposal was opening the door for use. “SRM technologies cannot tackle the root causes of the climate crisis and would instead enable major polluters to delay the urgent need to phase out fossil fuels,” said Mary Church, Senior Geoengineering Campaigner at the Center for International Environmental Law.
“SRM will affect agriculture, forests and biodiversity, human health and will impact food security and health in developing countries. There must be an agreement to not use these technologies,” an African negotiator told Table.Briefings. The US viewed the global assessment as a first step towards a global governance regime. Resulting in deadlocked negotiations.
Delegates, Table.Briefings spoke to, said that given entrenched positions it was too early in the discussion to push for a “no use agreement”. The EU played a bridging role to try build consensus, suggested setting up a repository of existing knowledge and understanding, including assessments by different UN and intergovernmental bodies like the World Meteorological Organisation (WMO), under the UNEP.
Some see the lack of a resolution as a missed opportunity. Investments in SRM research are rising. In 2021, the US National Academy of Sciences, Engineering, and Medicine recommended an initial investment of 100-200 million dollars over five years. The National Oceanic and Atmospheric Administration, under the US Department of Commerce, has invested 22 million dollars from 2019 to 2022. Last year, Degrees Initiative, a UK-based non-government group, announced funding of 900,000 dollars for researchers in 15 countries including Nigeria, Chile and India.
“We would have seen value in a substantive, informed and nuanced debate about solar radiation modification. Such a debate under UNEA auspices would have notably ensured the effective and full participation of developing countries. The rejection of the draft resolution is a missed opportunity for an open, broad and inclusive discussion,” said an EU negotiator. But all is not lost. “Despite not having a resolution, the discussions helped address trust issues,” said another EU negotiator.
“We do not believe you can address environmental issues without trade”, said World Trade Organisation Director General Ngozi Okonjo-Iweala addressing trade ministers from 160-odd countries at the opening session of the 13th Ministerial Conference in Abu Dhabi (Feb. 26-29). Just a few months ago, the WTO chief made a similar pitch at COP28 in Dubai, UAE. “How can trade work for a net zero transition? How do we get away from the narrative that trade is part of the problem? There are so many things that cannot happen without trade.”
Trade is an important way of pushing clean-energy technologies at speed and scale. According to the WTO chief, the world cannot get to net-zero without trade because it is indispensable for spreading low-carbon technology everywhere it is needed.
According to Okonjo-Iweala, trade policy is an underappreciated lever to drive emissions reduction. Integrating trade policy options such as reviewing import tariffs in low-carbon solutions, climate-sensitive criteria, such as low-carbon requirements for public procurements combined with open competition can help reduce emissions and adapt to climate impacts.
Okonjo-Iweala, Nigeria’s former finance minister, became the first woman and African to lead the multilateral trade organization on March 1, 2021. There could not have been a greater challenge. Even before taking office, the WTO faced enormous difficulties as its dispute settlement mechanism became dysfunctional due to the Trump administration’s failure to appoint members from the USA.
Her appointment came at a time when the world was still dealing with Covid-19. The pandemic had disrupted trade and countries were talking about on-shoring and friend-shoring, in many ways questioning the value of globalization. Concerns about limiting emissions and reducing the carbon footprint of products and the race for competitive edge was providing further fuel to what appeared to be a call to retreat from globalization.
The WTO chief is no stranger to climate change issues having served in different capacities with think tanks in the field of climate/environment, health such as the Washington DC-based World Resources Institute and as the co-chair, with Lord Nicholas Stern, of the Global Commission on the Economy and Climate.
Reinvigorating the WTO, restoring faith that the organization can deliver for all its members and ensuring it is fit for purpose for a world constrained by climate change and environmental crises with indications of as well as geopolitical fracturing figure high on her to-do list. Her experience in government as Nigeria’s finance minister who was also involved in trade negotiations, as development economist with the World Bank, as an economist addressing the issues at the intersection of the economy and climate, among her many other engagements have stood her in good stead as turned her attention on the WTO.
Responding to calls for de-globalization, Okonjo-Iweala pushed the idea of “reglobalisation”. A do-over of sorts addressing the deficiencies of globalization. “We need to think of globalization not in the way it was done before, but differently. And we need to make sure that those who did not benefit during the first round benefit this time.”
Practical globalization cannot ignore climate change and environmental crises. Her reform efforts led to the formation of the coalition of trade ministers for climate protection in January 2023. However, some states resist including climate issues in WTO negotiations. “The WTO should not negotiate rules on non-trade-related issues such as climate change, equality, labor, and the like,” said Indian Trade Minister Piyush Goyal, for example. Although environmental protection is enshrined in the WTO’s founding document, there are no global WTO negotiations on climate issues.
Born in Ogwashi-Ukwu, Delta State, Nigeria, she had her early education in Ibadan, Nigeria’s third largest city. After graduating school, she went to study economics at Harvard University in the US, she then studied city planning for her masters and then pursued a PhD in regional economics and development at the Massachusetts Institute of Technology. Her father, Chukwuka Okonjo, an economist was the Obi (king) of the Obahai royal family of Ogwashi-Ukwu in Nigeria. She is married to Ikemba Iweala, a neurosurgeon from Abia state, Nigeria. They have four children. The Nigerian-American novelist and doctor, Uzodinma Iweala, is their son. In 2019, she became a naturalised US citizen. Swimming, reading Agatha Christie novels, African art and Persian rugs, Nigerian food and traditional music figure in her list of hobbies. Urmi Goswami
Can you insure against climate change? Some US insurance companies no longer believe so. In the first US states, they are completely withdrawing from the property insurance market. After climate disasters, many victims are left bearing their costs. Umair Irfan reports from Washington on the consequences for homeowners, communities and state coffers.
Should solar geoengineering be considered as a last resort to address the climate crisis? This question was recently debated by states at the 6th UN Environment Assembly. While some states advocate for an examination of the risks and consequences, others fear opening Pandora’s box and weakening the existing geoengineering moratorium. Meanwhile, start-ups and government funding threaten to establish initial facts, reports Urmi Goswami.
There was also disagreement at the 13th WTO Ministerial Conference. WTO members are divided on whether climate issues should be debated within the framework of the World Trade Conference. Today, we introduce you to WTO Director-General Ngozi Okonjo-Iweala, who is fighting for greener global trade and sees trade policy as a means of climate action.
Another round of torrential downpours across the West Coast of the United States is raising water levels, triggering mudslides and renewing alarm about the future of property insurance across the country. In California, which has seen some of the most severe rainfall recently, the majority of residents suffering from floods will not have their losses covered by insurance.
In several states, including California, Florida and Louisiana, private insurance companies have recently terminated their current policyholders. They are not issuing new contracts or withdrawing from the market altogether. Without insurance, most banks will not lend money to potential homeowners or businesses for property purchases. This also slows down economic growth.
Due to the withdrawal of private companies, some states are establishing their own insurance companies. Although intended as “insurers of last resort“, these state-run entities, such as those in Florida, are becoming the largest insurers and often the only option for people living in high-risk areas. However, these companies also have their own financial problems and are increasing their premiums. California is now revising its regulations in hopes of enticing companies back. But insurers are still leaving.
The question is driving significant decisions, such as:
The property and casualty insurance industry in the US is worth almost 900 billion dollars. The sector has faced extraordinary stress in recent years due to disasters, many of them worsened by climate change. In 2023, during the hottest year ever measured, the US faced a record 28 separate events – including floods, cyclones, and wildfires – that resulted in at least 1 billion dollars in damages each.
But more costly disasters aren’t the only challenge for insurers; the amount of people and property in harm’s way is growing too. More than 40 percent of the US population lives in a coastal county, and as more people move in, they are building more homes, businesses, and factories that could be damaged by hurricanes and floods. More people are living in high fire risk areas as well, often drawn by cheaper real estate.
Another difficulty is that most property insurance in the US is offered by private companies regulated at the state level. That means insurers have to comply with different regulations in every state, making it harder for them to distribute risks across the whole country.
State insurance commissioners set rules for what insurance companies have to cover and how much they are allowed to charge. Some even prevent insurance companies from considering future climate change in their risk models. But with more property in danger and more damaging disasters looming, some insurance companies say they can’t stay in business without cutting their coverage or raising prices for their customers.
The big exception to the private property insurance model is flood insurance. The federal government’s National Flood Insurance Program provides more than 96 percent of flood coverage in the US since almost no private company can take on the risk. Flood insurance premiums are subsidized so more people can afford them, but that means the program pays out more in damages than it makes from its policyholders. The NFIP is currently more than 20 billion dollars in debt. Subsidized flood insurance has also created situations where people end up rebuilding their homes over and over in the same spot after a flood. One percent of homes account for 25 percent of claims under the NFIP.
Herein lies the dilemma: If an insurer focuses on making its policies affordable, it may not make enough to cover losses as disasters get worse, as the NFIP shows. If it focuses instead on properly pricing the risks from climate change, its products will be too expensive for most people to buy. And if it can’t raise prices, it will drop its customers.
As for homeowners, most are holding their ground even as disaster risks grow. When the NFIP began to revise its flood maps and raise premiums in 2021, hundreds of thousands of their customers let their insurance policies lapse rather than pay the higher rates. If a disaster strikes, they are uninsured.
There’s no easy answer to the insurance industry’s ongoing crisis, and the ultimate solution demands difficult decisions about who receives protection, who is forced to move, and who gets left exposed when the next calamity lands.
There will still be no structured global debate on the potential use of geoengineering techniques. At the 6th UN Environmental Assembly (UNEA 6) in Nairobi, Switzerland failed for the second time with a proposal to initiate a discussion on measures of solar radiation modification (SRM) in an international forum. After nearly two weeks of negotiations, the United States, Saudi Arabia and Japan opposed establishing a universally accessible knowledge base at the multilateral level.
Solar radiation modification (SRM) is an umbrella term for geoengineering technologies that would reflect more sunlight into space or block the sun thereby masking the heating effect of greenhouse gases. It is among the techno-fixes suggested to limit temperature rise to 1.5C above pre-industrial levels.
In a draft resolution submitted to the UN Environment Programme (UNEP) in December, Switzerland proposed a initiating global assessment of the risks and uncertainties of solar radiation modification technologies at the Sixth UN Environment Assembly (UNEA 6). An expert group doing the assessment would identify SRM technologies, detail the current state of science, activities and experiments, and impacts on the environment, biodiversity and economy, and ethical considerations.
Switzerland argued that despite decisions under different environment-related conventions and protocols to limit use of geoengineering, several countries were investing in SRM technologies and undertaking assessments. However, there was no global assessment of potential implications, risks and uncertainties, which are likely to be far greater than benefits, of these technologies. Switzerland said the proposal was not to promote or facilitate SRM deployment. Instead, it was to address the global assessment gap through a process under the UNEP, a trusted source in which all countries are equal stakeholders.
At UNEA4 in 2019, Switzerland proposed a global assessment of potential risks and benefits of geoengineering technologies for a stricter governance framework. As in UNEA6, the proposal was withdrawn because of strong opposition by the United States, Saudi Arabia.
Countries differed on the proposal’s operational aspects – how information is collected, which institution collects it and how it is presented – and on the gamut of risks and impacts to consider.
The global assessment would be based on the precautionary principle. Countries differed on their understanding of this principle.
Consensus in Nairobi was hindered by a lack of trust. Developing countries, especially the African group, Mexico, and Colombia, viewed a proposed SRM assessment as an attempt to undermine the existing moratorium or give the green light for deployment. Their concerns were confirmed by the European Commission’s expected request to the Group of Chief Scientific Advisers this fall, their scoping paper, and the report from the White House Office of Science and Technology Policy.
The unauthorised SRM experiments by US start-up Make Sunsets that resulted in a ban on geoengineering experiments in Mexico, and other proposed experiments added to the distrust. The Africa Group insisted on a “non-use agreement”. Just last year, the Overshoot Commission of experts recommended advancing research on SRM but imposing a moratorium on large-scale deployment.
Civil society observers too felt that the proposal was opening the door for use. “SRM technologies cannot tackle the root causes of the climate crisis and would instead enable major polluters to delay the urgent need to phase out fossil fuels,” said Mary Church, Senior Geoengineering Campaigner at the Center for International Environmental Law.
“SRM will affect agriculture, forests and biodiversity, human health and will impact food security and health in developing countries. There must be an agreement to not use these technologies,” an African negotiator told Table.Briefings. The US viewed the global assessment as a first step towards a global governance regime. Resulting in deadlocked negotiations.
Delegates, Table.Briefings spoke to, said that given entrenched positions it was too early in the discussion to push for a “no use agreement”. The EU played a bridging role to try build consensus, suggested setting up a repository of existing knowledge and understanding, including assessments by different UN and intergovernmental bodies like the World Meteorological Organisation (WMO), under the UNEP.
Some see the lack of a resolution as a missed opportunity. Investments in SRM research are rising. In 2021, the US National Academy of Sciences, Engineering, and Medicine recommended an initial investment of 100-200 million dollars over five years. The National Oceanic and Atmospheric Administration, under the US Department of Commerce, has invested 22 million dollars from 2019 to 2022. Last year, Degrees Initiative, a UK-based non-government group, announced funding of 900,000 dollars for researchers in 15 countries including Nigeria, Chile and India.
“We would have seen value in a substantive, informed and nuanced debate about solar radiation modification. Such a debate under UNEA auspices would have notably ensured the effective and full participation of developing countries. The rejection of the draft resolution is a missed opportunity for an open, broad and inclusive discussion,” said an EU negotiator. But all is not lost. “Despite not having a resolution, the discussions helped address trust issues,” said another EU negotiator.
“We do not believe you can address environmental issues without trade”, said World Trade Organisation Director General Ngozi Okonjo-Iweala addressing trade ministers from 160-odd countries at the opening session of the 13th Ministerial Conference in Abu Dhabi (Feb. 26-29). Just a few months ago, the WTO chief made a similar pitch at COP28 in Dubai, UAE. “How can trade work for a net zero transition? How do we get away from the narrative that trade is part of the problem? There are so many things that cannot happen without trade.”
Trade is an important way of pushing clean-energy technologies at speed and scale. According to the WTO chief, the world cannot get to net-zero without trade because it is indispensable for spreading low-carbon technology everywhere it is needed.
According to Okonjo-Iweala, trade policy is an underappreciated lever to drive emissions reduction. Integrating trade policy options such as reviewing import tariffs in low-carbon solutions, climate-sensitive criteria, such as low-carbon requirements for public procurements combined with open competition can help reduce emissions and adapt to climate impacts.
Okonjo-Iweala, Nigeria’s former finance minister, became the first woman and African to lead the multilateral trade organization on March 1, 2021. There could not have been a greater challenge. Even before taking office, the WTO faced enormous difficulties as its dispute settlement mechanism became dysfunctional due to the Trump administration’s failure to appoint members from the USA.
Her appointment came at a time when the world was still dealing with Covid-19. The pandemic had disrupted trade and countries were talking about on-shoring and friend-shoring, in many ways questioning the value of globalization. Concerns about limiting emissions and reducing the carbon footprint of products and the race for competitive edge was providing further fuel to what appeared to be a call to retreat from globalization.
The WTO chief is no stranger to climate change issues having served in different capacities with think tanks in the field of climate/environment, health such as the Washington DC-based World Resources Institute and as the co-chair, with Lord Nicholas Stern, of the Global Commission on the Economy and Climate.
Reinvigorating the WTO, restoring faith that the organization can deliver for all its members and ensuring it is fit for purpose for a world constrained by climate change and environmental crises with indications of as well as geopolitical fracturing figure high on her to-do list. Her experience in government as Nigeria’s finance minister who was also involved in trade negotiations, as development economist with the World Bank, as an economist addressing the issues at the intersection of the economy and climate, among her many other engagements have stood her in good stead as turned her attention on the WTO.
Responding to calls for de-globalization, Okonjo-Iweala pushed the idea of “reglobalisation”. A do-over of sorts addressing the deficiencies of globalization. “We need to think of globalization not in the way it was done before, but differently. And we need to make sure that those who did not benefit during the first round benefit this time.”
Practical globalization cannot ignore climate change and environmental crises. Her reform efforts led to the formation of the coalition of trade ministers for climate protection in January 2023. However, some states resist including climate issues in WTO negotiations. “The WTO should not negotiate rules on non-trade-related issues such as climate change, equality, labor, and the like,” said Indian Trade Minister Piyush Goyal, for example. Although environmental protection is enshrined in the WTO’s founding document, there are no global WTO negotiations on climate issues.
Born in Ogwashi-Ukwu, Delta State, Nigeria, she had her early education in Ibadan, Nigeria’s third largest city. After graduating school, she went to study economics at Harvard University in the US, she then studied city planning for her masters and then pursued a PhD in regional economics and development at the Massachusetts Institute of Technology. Her father, Chukwuka Okonjo, an economist was the Obi (king) of the Obahai royal family of Ogwashi-Ukwu in Nigeria. She is married to Ikemba Iweala, a neurosurgeon from Abia state, Nigeria. They have four children. The Nigerian-American novelist and doctor, Uzodinma Iweala, is their son. In 2019, she became a naturalised US citizen. Swimming, reading Agatha Christie novels, African art and Persian rugs, Nigerian food and traditional music figure in her list of hobbies. Urmi Goswami
