Climate Change vs Insurance Risk
Ian Adams, ICLE Executive Director was quoted by Ability Magazine in an article about how climate change is driving extreme weather that threatens to make parts of the U.S. “uninsurable”. Read the full story here.
But some believe that Proposition 103 has proven to be a rigid set of regulations that, instead of stabilizing the California homeowners insurance market, it has been the cause of major insurance players withdrawing or reducing coverage. Lawrence Powell, R.J. Lehmann, & Ian Adams in the paper “Rethinking Prop 103’s Approach to Insurance Regulation” (International Center for Law & Economics on November 6, 2023) conclude that “Prop 103 has created an insurance market that struggles to work efficiently even in the best of times and is virtually impossible to sustain in periods of acute stress.” They assert that Proposition 103 has become a set of strict regulations that, instead of stabilizing the California homeowner’s insurance market, has caused major insurance companies to withdraw or reduce coverage. They conclude that Prop 103 struggles in the best of times and is likely unsustainable during periods of high stress.