BUSINESS + ECONOMY

Insurance companies eyeing climate change when considering risks, costs

Jul 11, 2023, 6:00 AM

(TW Peterson) Follow @amandadickson...

(TW Peterson)

(TW Peterson)

SALT LAKE CITY — Climate change has been so politicized as a topic. Even meteorologists have recommended calling it “extreme weather” instead of climate change to try to avoid politics. But for insurance companies, climate change is not political.

“When you’re talking about insurance, and especially when you’re getting into homeowners insurance, insurance companies have to think about all risks,” said Jon Pike, commissioner of the Utah Insurance Department. “Wildfires, earthquakes and floods, they could all be affected by weather patterns.”

Pike is familiar with the challenges of word choice.

“Whether it’s climate change, trends in climate or whether it’s cyclical, it’s up to the insurance companies to determine what they should look at.”

It’s a business decision

Insurance companies look at climate change as part of a business decision. Can we afford to cover homes in this area?

“Some large carriers in California, like Allstate and State Farm, have said, ‘We’re going to keep the business we have, but we’re not going to write new homeowners insurance policies’,” Pike explained.

Insurance companies have to consider all the risks before they decide whether to write a policy.

Have any companies pulled out of Utah?

“Not yet,” Pike answered. “I will say there are a few that are having some similar concerns.”

The insurance companies that have expressed concerns have said something like, “Well, we may not write new business in Summit County, for example.”

Pike can’t point to a specific insurance company that might pull out of Utah because “it’s still developing, but you can see why there are some concerns.”

A company may decide that its market share is a little too high in a wildfire area.

“[The company might say] ‘Nothing against Utah. Nothing against a particular county, but maybe we should pull back a little bit’,” Pike said.

All in all, the commissioner was clear.

“Right now, we don’t have a problem that I’m aware of anywhere in Utah where we can’t get homeowners insurance and at competitive prices.”

It’s a team effort

When an insurance company looks at insuring homes and businesses in an area, it doesn’t just look at the climate-related risks, like wildfire. It looks at what the state and community are doing to mitigate those risks.

Public policy matters.

“I’m pleased that the legislature has been looking into these issues for the last several years, actually,” Pike explained.

Legislators are talking with the Department of Natural Resources, with fire chiefs, with the leaders of cities and counties, to find out what we should be learning more about and what mitigation efforts we should be taking.

One example of this is prescribed burning. Several counties in Utah conducted controlled burns this year as a tool to reduce hazardous fuels, which can lead to more wildfires.

“We love to be able to point (insurance companies) to that kind of efforts to say, ‘See what we’re doing in our state and these counties. See the kinds of efforts to be proactive and preventive in terms of wildfire’,” Pike elaborated.

“One size misfits all”

Regulating insurance is up to the states.

“I believe there is good reason for that,” Pike said. “There is a quote used in local government — one size misfits all.”

Pike attributed that quote to Cameron Diehl, Executive Director of the Utah League of Cities and Towns.

“The risks Utah might have are very different from the risks of New York or California, Idaho, or Puerto Rico.”

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

Business + Economy

A car is filled at a gas pump in Sandy on Tuesday, March 19, 2024. Utah gas prices are currently be...

Allessandra Harris Gurr

Utah gas prices below national average in time for summer season

Utah gas prices are below the national average price for gas and the prices are expected to stay that way over the summer.

14 hours ago

Image of Temple Mountain found on BLM land within Emery County, Utah. (Mike Coronella)...

Aimee Cobabe

Utah files lawsuit over BLM Public Lands Rule

In the lawsuit, Utah accuses the BLM of taking a "museum-like" approach to the state's public lands.

1 day ago

Pioneer Stadium in Ogden is getting a $4.3 million upgrade, expected to be complete in time for the...

Tim Vandenack, KSL.com

Ogden’s Pioneer Stadium – site of a major annual rodeo – getting $4.3M upgrade, new name

The upgrade to Ogden's Pioneer Stadium includes additional seats and new equipment for rodeo participants.

2 days ago

Quishing...

Josuee Sanchez

Beware of “quishing” or QR code phishing says Better Business Bureau

Scammers are using "sqishing" or QR phishing to con people into giving personal their personal information.

3 days ago

The front of the Holladay Lions salt lake county recreation center...

Allessandra Harris Gurr

The hidden cost of recreation centers

A new report shows that several recreation centers in Utah operate at a deficit in the millions. Part of covering that gap comes via taxes.

3 days ago

The Utah Women & Leadership Project, based out of Utah State University in Logan, Utah, reports tha...

Alexandrea Bonilla

Report finds fewer Utah workers experiencing sexual harassment

For the first time in years, the number of sexual harassment reports filed with the EEOC places Utah in line with the national average.

3 days ago

Sponsored Articles

Underwater shot of the fisherman holding the fish...

Bear Lake Convention and Visitors Bureau

Your Bear Lake fishing guide

Bear Lake offers year-round fishing opportunities. By preparing ahead of time, you might go home with a big catch!

A group of people cut a purple ribbon...

Comcast

Comcast announces major fiber network expansion in Utah

Comcast's commitment to delivering extensive coverage signifies a monumental leap toward a digitally empowered future for Utahns.

a doctor putting her hand on the chest of her patient...

Intermountain Health

Intermountain nurse-midwives launch new gynecology access clinic

An access clinic launched by Intermountain nurse-midwives provides women with comprehensive gynecology care.

Young couple hugging while a realtor in a suit hands them keys in a new home...

Utah Association of Realtors

Buying a home this spring? Avoid these 5 costly pitfalls

By avoiding these pitfalls when buying a home this spring, you can ensure your investment will be long-lasting and secure.

a person dressed up as a nordic viking in a dragon boat resembling the bear lake monster...

Bear Lake Convention and Visitors Bureau

The Legend of the Bear Lake Monster

The Bear Lake monster has captivated people in the region for centuries, with tales that range from the believable to the bizarre.

...

Live Nation Concerts

All the artists coming to Utah First Credit Union Amphitheatre (formerly USANA Amp) this summer

Summer concerts are more than just entertainment; they’re a celebration of life, love, and connection.

Insurance companies eyeing climate change when considering risks, costs