Climate change could increase losses in flood and crop insurance programs significantly in coming decades, according to a USA Today article available here. Agri-Pulse also published an article available here and Insurance News here.
The Government Accountability Office’s (GAO) report found that exposure to losses for property insured under the two programs grew from 8 percent to $1.4 trillion over the past six years due to population growth and increased property values in hazard-prone areas.
The GAO study says climate change “may substantially increase losses by 2040 and increases losses from about 50 to 100 percent by 2100,” according to Agri-Pulse.
“(FEMA and RMA) face challenges that may limit their ability to minimize long-term federal exposure to climate change,” the report summary said. “For example, because of the short-term nature of insurance (i.e., contracts typically estimate and communicate risk of property losses for the 1-year term of a policy), FEMA and RMA face a challenge in encouraging policyholders to reduce their long-term exposure to climate change risks.”
FEMA is currently $24 billion in debt because of extreme weather events, and in 2006 the GAO labeled the National Flood Insurance Program as "high risk" for long-term insolvency, according to Insurance News.
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