Risky business

Summary

Podcast Summary: Unexplainable – “Risky Business”

Release Date: June 29, 2026
Host: Meredith Hodnot (Vox)
Guests: Karen Clark (catastrophe modeling pioneer), Umair Irfan (Vox climate correspondent), Joe Scuba (insurance executive & homeowner), Carolyn Kuski (Environmental Defense Fund)

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Episode Overview

This episode dives deep into how insurance—once a stabilizing force—faces rapidly escalating risk as climate change increases both the frequency and unpredictability of disasters. The Unexplainable team investigates how the system is struggling, why insurance premiums are soaring, and what “uninsurable” might mean for millions of people. With stories from industry insiders and experts, the discussion cuts to the heart of a growing crisis: what happens when even insurers can't protect us?

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Key Discussion Points & Insights

1. The Origins of Catastrophe Modeling

• Karen Clark’s disruption (02:36–03:37):
  In the late 1980s, Karen Clark introduced computer models to simulate worst-case disaster scenarios. When she presented at Lloyd’s of London predicting a direct hurricane hit on Miami could cost insurers $60 billion, the response was scoffing disbelief.

  • "I waddle into the room...and there was just silence in the room. I think they must have thought, you know, where's the punchline?" — Karen Clark (02:36)

• Validation: Hurricane Andrew (1992) (04:25–06:22):
  Hurricane Andrew’s actual costs (over $15 billion) stunned insurers, proving Clark’s once-derided models frighteningly accurate.

  • "Had Andrew struck 50 miles north, the losses would have been about $60 billion.” — Karen Clark (06:11)
  • Nearly a dozen insurance companies went bankrupt in the aftermath.

2. Climate Change and Exploding Risk

• Insurance as the bellwether (07:33–08:29):
  Insurance is the first economic system to feel the shock of escalating climate disasters—often before visible destruction.

  • "The first impact most people are likely to experience related to climate change is a higher insurance rate.” — Umair Irfan (07:50)

• Personal View: Joe Scuba, Insurance Executive (08:29–10:30):
  Joe’s experience as an insurance executive and homeowner in New Orleans illustrates how premiums are rising year after year—even for insiders.

  • "If the prices are going up and the options are going down, it's not because there's...sinister greed...it's because somewhere a math equation was done.” — Joe Scuba (10:10)

3. Why Insurance Costs Are Skyrocketing

• Underrated risks: Not just big storms (11:10–12:54):
  The industry once again underestimates risk—not for hurricanes, but for accumulations of “smaller” disasters: hail, wildfires, tornadoes, winter storms.

  • "It's the smaller storms, the local storms...that are the hidden arm of climate risk right now.” — Meredith Hodnot (11:27)

• Globalization of risk (12:54–13:33):
  Reinsurance means losses anywhere in the world raise rates everywhere.

  • "Every disaster in the world, in a tiny way, is trickling down into my insurance policy.” — Umair Irfan (13:13)

4. Property Exposure and Socioeconomic Patterns

• Value of what’s at risk is surging (13:33–14:44):
  Sky-high construction costs, pricier homes—even in modest neighborhoods—mean insurers must charge more just to cover replacement value.

  • "If the cost to replace your home has gone up by 50%, your insurance premium needs to go up by 50%." — Karen Clark (14:17)

• Sprawling into disaster zones (14:44–15:14):
  Social pressures drive people into high-risk areas (e.g., wildland-urban interface), exposing more and more property to disasters.

• “We are still the biggest driver of increasing losses.” (15:14) — Karen Clark emphasizes that human choices—where and how we build—are inflating risks more than nature alone.

5. When Insurance Vanishes

• Homeowners “painted red” (15:53–16:19):
  In high-risk areas, private insurers pull out. Even insurance industry veterans like Joe can’t get coverage.

  • "No one can get insurance...maybe the industry paints the region with one broad brush and just says red.” — Joe Scuba (16:06)

• The mortgage trap (16:27–16:45):
  Without insurance, homeowners can lose their mortgages or home.

• Emotional toll (16:45–17:17):
  The mounting difficulty of living in beloved yet high-risk regions like New Orleans.

  • "There's a breaking point coming...there’s so much culture and charm and awesome stuff here that people don’t want to leave. But, boy, it’s getting harder and harder to stay.” — Joe Scuba (16:45)

6. The Policy and Equity Challenge

• Insurance could become a “luxury of the affluent” (19:31–20:59):
  Rising costs and shrinking options especially threaten low and middle income Americans.

  • "If we are not careful, we could lock in policy change that…makes insurance a luxury of the affluent.” — Carolyn Kuski (20:51)

• The rise and risk of public insurance programs (23:10–24:57):
  As private insurers exit, state and federal programs become the “insurer of last resort”—offering only expensive, barebones coverage.

  • "The last line of defense becomes the only option.” — Umair Irfan (24:22)
  • "If another Katrina...occurs...the money has to come from somewhere and at the end of the day, it's coming from taxpayers." — Joe Scuba (24:57)

7. Will the Future Be Uninsurable?

• Growing existential worry (25:31–26:01):
  People must now consider if their homes will become uninsurable, unsellable, or uninhabitable.

  • "Will I have waterfront property? Will I be underwater?...it absolutely is something being brought to the forefront.” — Joe Scuba (25:31)

• A “doomsday” climate math (26:01–26:19):
  "If you flip that and say that means this summer was the coolest you might see in your lifetime...that starts to drive home what we’re dealing with.” — Carolyn Kuski (26:01)

8. Insurance Industry: The Paradox of Power and Leverage

• Insurer potential to drive systemic change (26:30–27:47):
  Because insurers control trillions in investments, they can incentivize risk reduction and climate resilience.

  • "They're very powerful players...they do invest it, especially reinsurance companies are investing in clean energy companies.” — Umair Irfan (26:54)

• Insurers can shape how we rebuild (27:47–28:49):
  Advocacy for resilient reconstruction after disasters, and for opening up the risk conversation to more communities and stakeholders.

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Notable Quotes & Memorable Moments

• Karen Clark (on presenting to Lloyd’s of London):
  "I waddle into the room...and there was just silence in the room. I think they must have thought, you know, where's the punchline?" (02:36)

• Umair Irfan:
  “The first impact most people are likely to experience related to climate change is a higher insurance rate.” (07:50)

• Joe Scuba:
  “If the prices are going up and the options are going down, it’s not…sinister greed…it’s because somewhere a math equation was done.” (10:10)
  "No one can get insurance...the industry paints the region with one broad brush and says red.” (16:06)

• Carolyn Kuski:
  "We could lock in policy change that…makes insurance a luxury of the affluent.” (20:51)
  “There's not a perfect program to implement…What we need is a shared culture of risk management.” (28:18)

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Important Segments and Timestamps

• [02:36] – Karen Clark’s “heresy” at Lloyd’s: the dawn of computer catastrophe modeling
• [04:29 & 05:00] – Hurricane Andrew validates catastrophic risk models, industry shock
• [07:33] – “Insurance is where the rubber meets the road” on climate change (Umair Irfan)
• [08:29–10:30] – Joe Scuba personalizes the premium crisis
• [11:10] – Undervaluing local and “non-headline” disasters (Karen Clark)
• [13:13] – Global risk interconnection via reinsurance (Umair Irfan)
• [15:14] – Humans, not nature, are driving loss increase (Karen Clark)
• [16:06] – The insurance “redlining” of entire regions (Joe Scuba)
• [19:31, 20:51] – Equity crisis: Affordability for average Americans (Carolyn Kuski)
• [23:10–24:22] – Public insurance as “insurer of last resort,” taxpayer risk
• [25:31] – Real fears about uninsurable homes (Joe Scuba)
• [26:01] – “Doomsday” summer: future risk re-framed (Carolyn Kuski)
• [26:54] – Insurer investment power and clean energy pivot (Umair Irfan)
• [27:47–28:49] – Push for “shared culture of risk management” and resilience (Carolyn Kuski)

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Conclusion & Call to Action

“Risky Business” re-frames modern insurance: not just as a technical safety net, but as a canary in the coal mine for broader economic and social risks from climate change. The discussion closes with a call for more transparent models, policy changes that avoid pricing out the vulnerable, and for insurers to harness their economic muscle for resilience—while underlining the urgent, shared need for cultural shifts in risk awareness and management.

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For listeners: This episode is packed with real-world examples and sharp insight—essential for anyone who owns a home, worries about disasters, or wants to understand the financial frontline of climate change.

Transcript

[Meredith Hodnot]

When I got a new car, I thought my insurance premium would increase and empty my bank account like if fatween won the lottery. I've invested most of my winnings in chicken tenders because they're bomb. But bro, I bought a house and it's sick, bro. I'm thinking the floor is going to be all trampoline, bro. With a helipad on the roof. The contractor said it's structurally unsound but they're just being babies.

[Karen Clark]

But switching to GEICO saved me hundreds so my bank account is safe.

[Meredith Hodnot]

It feels good to save some hard earned cash.

[Joe Scuba]

It feels good to geico.

[Meredith Hodnot]

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[Umair Irfan]

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[Meredith Hodnot]

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[Karen Clark]

Hello, it is Bird.

[Meredith Hodnot]

As you might have heard, we are busily working away on a big project over here at Unexplainable and I'm very jazzed to to finally show you all what we have been doing soon. But for now, as we work on that, we are bringing you a few of our favorite episodes. So Today's comes from 2024. It is hosted by the amazing Meredith Hodnot. And I wanted to share it now because we are at the start of hurricane and wildfire season. It seems that every year we get these two devastating natural disasters that kill dozens of people, cause tens of billions of dollars in damages. And this episode focuses on the ways that we protect ourselves from disasters, which is to say insurance. It asks when risks become less predictable, what do we do next? Here's me. Karen Clark says she wasn't that nervous when she walked into the Lloyd's of London offices, one of the oldest and at the time most powerful insurance marketplaces in the world. She was there to tell over a hundred well dressed, very polite British men that they were doing their job all

[Karen Clark]

wrong and I was seven months pregnant. So, so I waddle into the room and I make this presentation and there was just silence in the room. I think they must have thought, you know, where's the punchline?

[Meredith Hodnot]

Karen was using newfangled 1980s computers to model the worst case scenario A devastating climate catastrophe. And her model said a disaster like a direct hurricane hit on Miami would cost the insurance industry $60 billion, nearly 10 times more than these experts thought possible.

[Karen Clark]

They had their tried and true methods of assessing risk, and they had been making a lot of money. So they felt that they had everything all figured out.

[Meredith Hodnot]

Risk is a combination of two things. First, the hazard. Second, so in this case, the hurricanes,

[Karen Clark]

it's not really enough to know what if scenarios. So, for example, what If a Category 4 hurricane hits New York City? Or what if a Category 5 hits Miami? That's very interesting information, but what is the probability of that?

[Meredith Hodnot]

And the second part of risk is the exposure. In other words, what are the things, buildings, bridges, property that are in the path of the hurricane?

[Karen Clark]

People were moving to coastal areas and particularly Florida in droves. So insurance companies were not tracking the values of the homes that they were insuring.

[Meredith Hodnot]

But it didn't take long before Karen's catastrophe models were put to the test.

[Joe Scuba]

A hurricane watch is now in effect for.

[Karen Clark]

So Hurricane Andrew, I remember like it was yesterday, made landfall at 5am on August 24, 1992.

[Meredith Hodnot]

It is starting to rock and roll out here. Raging storm surges and treacherous winds battered Florida's southern coast.

[Joe Scuba]

We have no Miami radar, so we can forget the Miami radar.

[Meredith Hodnot]

It fell off the building. Karen and her team ran the numbers again, again and again, trying to get a sense of just how much devastation Andrew would bring.

[Karen Clark]

I never doubted myself until an hour before we were about to release this fax that the losses, industry losses could exceed 13 billion. Honestly, even I was thinking, wow, that's a big loss. What does that look like? Could that be real? Could that be right? Well, I will tell you, Meredith, the first started ringing off the hook. Nobody believed it. They thought we were crazy. I remember the quotes today. A few mobile homes in an air force base. How much can it be?

[Meredith Hodnot]

But as the storm passed, the destructive power of Andrew was clear.

[Karen Clark]

It looks like the aftermath of nuclear

[Meredith Hodnot]

war in many places at the time. This was 1992. Andrew was one of the strongest and most expensive storms to have hit the country. With insurance claims coming in over $15 billion, is there enough insurance money out there to rebuild these communities? In the aftermath, nearly a dozen insurance companies went bankrupt. The whole industry was in shock. And Andrew had just missed downtown Miami right there.

[Karen Clark]

Insurer saw that. Oh, had Andrew struck 50 miles north, the losses would have been about $60 billion.

[Meredith Hodnot]

All of a sudden, Karen's fringe models seemed prophetic.

[Karen Clark]

The world really changed. I would say After Andrew, it was really a wake.

[Meredith Hodnot]

Hurricane Andrew was a risk reckoning rippling out from southern Florida to the whole world as global insurance markets completely transformed their perspective on the risk of climate disaster. And now, more than 30 years later, after Katrina and Harvey, after Irene and Maria and and Helene, we're in the midst of another risk reckoning, this time for climate change. I'm Meredith Hodinot and this is unexplainable.

[Umair Irfan]

Insurance is where the rubber meets the road when it comes to climate change. This is sort of the first place where we start to see the effects manifest in our economy.

[Meredith Hodnot]

Umair Irfan is a correspondent at Vox, reporting on all things climate and science.

[Umair Irfan]

Even before you see some sort of damage from an extreme event or anything like that, the first impact most people are likely to experience related to climate change is a higher insurance rate.

[Meredith Hodnot]

Umair is the one in the newsroom tracking every major storm and putting everything in context.

[Umair Irfan]

I mean, insurance has always been kind of on the margins of a lot of the disaster reporting that I've been doing. So every time a hurricane comes through, you know, you talk about the wind speed, you talk about how much flooding there is, and then in the aftermath, you talk about the damages, you talk about the dollar amount. So from there I started looking at, well, how do insurance companies start reckoning with climate change? How are they reckoning with some of this extreme weather?

[Joe Scuba]

As someone in the insurance industry, intellectually I understand it. As a homeowner, it's awful. It really sucks.

[Umair Irfan]

I talked to you, Joe Scuba, and Joe is actually an executive at an insurance company. This is his bread and butter. And here he is struggling to get insurance on his own home.

[Joe Scuba]

As I talk to friends, oh my God, you know you're an insurance. Have you, have you seen this? Are they, are they raking me over the coals? Am I getting taken advantage of like now? Man, there's, I mean, it's been a lot.

[Meredith Hodnot]

Joe lives in New Orleans and he bought his house a few years ago at the start of the pandemic. He loved the neighborhood. It's not far from the Mardi Gras parade routes and he loved how much space he had to raise his now 10 year old triplets.

[Joe Scuba]

Got a nice little yard. It's nothing huge, but it's there and there's room to go play outside and a nice place to live.

[Meredith Hodnot]

I think most importantly, it was above sea level. Something to really consider in New Orleans.

[Joe Scuba]

You know, we've lived through Katrina and had families whose houses were underwater for weeks and trying to Stay out of that danger zone was certainly key for us.

[Meredith Hodnot]

That first year, Joe's home insurance premiums weren't that bad.

[Joe Scuba]

And then each year after that, things got a little tighter and a little, oh, well, you know, we're raising rates a little bit, we're raising rates a little bit. Wasn't like we moved in. And it was such a stretch that, boy, if my mortgage goes up by a dollar, I'm in trouble, Right? There was margin there, but boy, that margin is eroding pretty darn quickly.

[Meredith Hodnot]

Even as Joe's premiums skyrocketed, his job in the insurance industry gave him a unique perspective.

[Joe Scuba]

If the prices are going up and the options are going down, it's not because there's, you know, a sinister greed behind all of it. It's because somewhere a math equation was done. That said, if we keep doing that, there won't be enough money for all of the other people that we're trying to insure.

[Meredith Hodnot]

So what is causing insurance prices across the country, not just Joe's, to explode in just the last few years?

[Umair Irfan]

The climate is changing and this is the really fundamental thing. This is the ground that is shaking beneath everybody's feet.

[Meredith Hodnot]

But of course, climate change isn't anything new.

[Karen Clark]

We've had warming since 1900, so the models have to capture everything that's happened so far. And then we also need to give our clients, insurers, future views.

[Meredith Hodnot]

Karen Clark's company has been modeling catastrophe for decades, and she says right now we're at an inflection point for the industry.

[Karen Clark]

There is systemic underestimation in the insurance industry again today, like at the time of Hurricane Andrew. But it's not for hurricanes.

[Umair Irfan]

Extremes like those big named storms aren't the only ones that cause a lot of damage.

[Meredith Hodnot]

It's the smaller storms, the local storms, the ones that don't necessarily make the national news, that are the hidden arm of climate risk right now.

[Karen Clark]

So severe convective storms, these are the thunderstorms that generate hail, tornadoes, tornadoes that we see almost every day. More extreme wildfires and winter storms. The Arctic air outbreak we had in February of 2021, where all the damage in Texas with all the pipes burst

[Meredith Hodnot]

and the freeze, record breaking hailstorms, tornadoes ripping through small towns, hyper local torrential floods, wildfires blazing through remote counties. These are the new generation of smaller disasters that are driving up insurance losses and driving up insurance premiums. These local disasters aren't going to bankrupt insurance companies, but they're happening everywhere and they're reaching greater and greater extremes and as these disasters, big and small, add up, local insurance companies turn to the global system of reinsurance to make sure that they can cover the claims without going bankrupt. This insurance for insurance comes from just a handful of companies that hold a lot of power over the industry worldwide.

[Umair Irfan]

You can have a situation where if you have one year where you have a whole bunch of disaster losses in different parts of the world, you have typhoons in the Philippines, you have an earthquake in California, wildfires in Brazil, lots of different insurance companies are going to be making claims against the reinsurance company. And then the reinsurance company is very likely going to raise the rates for everyone. So even if I'm here in the middle of Illinois and I manage to avoid all the wildfires and hurricanes, my insurance rate is going to go up partially as a consequence of all these other disasters. So every disaster in the world, in a tiny way, is trickling down in into my insurance policy.

[Meredith Hodnot]

Then there's the other side of climate risk. Not the hazards, the disasters themselves, but the exposure, the things and people and property that's in the way.

[Karen Clark]

And while climate change is having an impact on most weather related perils, the primary driver of increasing losses over the past few decades have been increasing property values.

[Meredith Hodnot]

A lot of home insurance policies in the US are for indemnity insurance, meaning that if your home is damaged or destroyed, then the insurance company is mostly on the hook to pay, you know, after a deductible, whatever it takes to replace and restore it completely.

[Karen Clark]

So if the cost to replace your home has gone up by 50%, your insurance premium needs to go up by 50%. And even if there's no change in

[Meredith Hodnot]

the rate, that's because it costs a lot to build anything right now with supply chain shortages and inflation driving up construction costs.

[Umair Irfan]

So particularly in places like coastal areas, you know, where you have expensive beachfront condos and houses and mansions.

[Meredith Hodnot]

But it's not just luxury vacation homes that are driving up risk.

[Umair Irfan]

You know, in California, for instance, they're dealing with a housing crisis. The big cities are really expensive. And so you see people moving further into rural areas, into this place called the W land urban interface, where urban development meets nature. And at that interface, that's where you actually see some of the highest wildfire risk. And so as these economic forces and social forces are pushing people into these high risk areas, we're seeing a greater amount of exposure.

[Karen Clark]

We are still the biggest driver of increasing losses. Not mother Nature, not the environment, because we're continuing to build very expensive properties so that when there's a hurricane or when there's a flood, just more property to destroy.

[Joe Scuba]

The cost to bring my house back to new or back to what it is is higher. You know, the thing that I'm insuring has gone up in value. And so of course the price has gone up. And would I love to see that different. Of course. But it's a math equation. At the end of the day, what does it take to fix it? And that number's changed.

[Meredith Hodnot]

Joe spent the last few years watching his insurance premiums giving get more and more expensive. And then two years ago, he just couldn't find insurance at all.

[Joe Scuba]

Myself and all of my neighbors and all of my friends and all the people that live around here, no one can get insurance. You know, maybe the insurance industry paints the region with one broad brush and one color and it just says red.

[Meredith Hodnot]

Avoid this left. Joe and a lot of other homeowners in Louisiana in a pretty tricky situation.

[Umair Irfan]

If you live in a house, odds are if you don't own the house outright, you have a mortgage. And in order to get a mortgage, in order to get a loan from a bank, you need to have insurance. And if you lose insurance coverage for that house, the bank is going to require that you buy insurance in order to stay in that house.

[Joe Scuba]

There's a breaking point coming. What does that look like? What does it mean? You know, I don't know. But I'm part of this insurance industry. I know kind of that bigger picture and how and why it works. And maybe all that helps me do is be angry at the right people. I don't know that it matters much in the end. I think part of the whole thing of New Orleans is there's so much culture and charm and awesome stuff here that people don't want to leave. But, boy, it's getting harder and harder to stay.

[Meredith Hodnot]

So what does it mean if the future is uninsurable?

[Joe Scuba]

When I scraped my car in that parking garage, I was worried that it could be a long process to take care of it. Like a landscaper's first day trimming a hedge maze. I have definitely already been here. That was a left right or right left. Well, maybe I'll cut a path out and find my way back later. But it wasn't like that. I filed a claim in under two minutes on the Geico app, and they handled it from there. It was taken care of almost as quickly as it happened. It feels good to get help quick. It feels good to Geico right now. Get up to 15% off select storage solutions.

[Umair Irfan]

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[Joe Scuba]

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[Meredith Hodnot]

so

[Carolyn Kuski]

good, so good so good.

[Meredith Hodnot]

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[Carolyn Kuski]

Risk is invisible. People don't see see risk until something bad's happening. Unless you're the person running the models and doing the assessments.

[Meredith Hodnot]

Carolyn Kuski works for the Environmental Defense

[Carolyn Kuski]

Fund and I look at the economic impacts of climate change.

[Meredith Hodnot]

In particular, she's spent a lot of time studying disaster insurance and Umayr's main

[Umair Irfan]

question how doomed is the insurance industry?

[Carolyn Kuski]

That's a good question. And I think how doomed the industry is depends a lot on policy interventions and what we do in the next few years. Rising insurance rates have been a confluence of things and it is definitely the case that because of our prior period of high inflation, supply chain disruptions, labor shortages, that is part of what's driving up higher insurance costs. Absolutely. What we also see though is that rates are going up even more in the areas of high climate risk and where insurers are pulling out of markets. It's areas of high climate risk and as risks go up, you can increase the cost of insurance to still keep it viable, but then you're making it harder and harder for low and middle income Americans to afford the coverage they need that is now front and center for lots of people. The increasing rates, the declining availability have really started to hit households in a way that's really making clear the economic impacts of climate change. And so I think we're at a window where we know we need solutions. We can't keep letting this spiral out of control. And if we are not careful in those though, we could lock in policy change that doesn't lower our risk going forward and essentially makes insurance a luxury of the affluent. And so I think we need to think really carefully about our policy interventions at this moment and make sure they're getting us the long term objectives that we want.

[Umair Irfan]

How do insurance companies then determine where to set your deductible and where to set the premiums?

[Carolyn Kuski]

Yeah, so that's the rise of what are called catastrophe models. These are big models that insurance use to decide where to offer policies and how much to charge for them. And, and that's been really important for a number of reasons. One is the historical record is too short. If you're talking about rare events, you can't just look at a few decades even of data to estimate very rare events. But more importantly, right now, these are changing and quite a bit because of climate. And with climate change, we now need models to understand because our future risk doesn't look like our past risk anymore.

[Umair Irfan]

Is anyone besides insurance companies using these models?

[Carolyn Kuski]

Yeah, I think this is a really important conversation to be having right now because as climate risks are escalating, all sorts of groups are needing better information on their risk and how it's changing. Everything from a household deciding where to move to local governments deciding about land use and zoning and siting infrastructure, to big companies trying to figure out where to put their buildings. And so we've seen huge increasing demand from many types of players for climate risk information. Unfortunately, many of those players don't understand how that climate risk information is produced. And that's creating challenges because there are some models that are frankly a lot worse than others, or that have very problematic assumptions, or that might be good but are just not fit for your purpose. But without that understanding, it can be very difficult for users to know what type of risk information they should be drawing from. So it's a very live issue to figure out how to give people the guidance that they need. And there's been many groups calling for open source, transparent models that people can have a lot of faith in.

[Umair Irfan]

Well then what happens if all the math, all the models don't work out and the insurance companies just decide it's not worth the risk?

[Carolyn Kuski]

Yeah.

[Umair Irfan]

What would it mean for the future to be uninsurable?

[Carolyn Kuski]

I think there are concerns about the private market leaving high risk areas. But what we have seen happens then is that the government provides insurance. The government provided flood insurance. These state programs are providing insurance. So when things become uninsurable, it really means we have the public sector pick it up. And that's still attention that we're seeing right now, because what's happened in the last few years is that many insurance companies have raised rates or exited these high risk areas, forcing consumers into these state programs. So California, Louisiana, Florida have all seen dramatic increases in the Number of residents who have to find coverage through the state program.

[Karen Clark]

Program.

[Carolyn Kuski]

And so that's raising these questions of who should pay for the cost of disasters.

[Meredith Hodnot]

In the case of Joe, the insurance executive who was struggling to find insurance on his own home, he was forced to go to his state's public insurance program, Louisiana citizens.

[Joe Scuba]

Well, I, it's not an exaggeration to say that everyone I've spoken to has to be with citizens, just everyone below I 10.

[Umair Irfan]

The state run insurance companies, they function basically as what they call an insurer of last resort. But the coverage that they provide is just frankly not very good. And that's by design. It's very expensive policies that have very high deductibles and that don't cover very much because again, it's just meant to be an emergency backstop. The trouble is, with all these private insurers pulling out, there are a number of people in a lot of states who are finding out that they have no option other than these state run insurance companies. So the last line of defense becomes

[Joe Scuba]

the only option if another Katrina, God forbid, occurs and the city has just overwhelming losses or the state in general. Right. I mean, the money has to come from somewhere and at the end of the day, it's coming from taxpayers.

[Meredith Hodnot]

So Joe is stuck paying premiums he can barely afford in a house he doesn't know if he'll be able to sell in a state that's on the hook for footing the bill in a world where the risk of climate disaster just keeps ratcheting up.

[Joe Scuba]

You know, in 10 years, will I have waterfront property? Will I be underwater? Will it be pretty much exactly the same as it is right now? I can't answer that, but it absolutely is something that is being brought to the forefront in terms of risks. You know, and so my wife and I have conversations from time to time about, well, where would we go? This isn't just a Louisiana issue, this isn't just a New Orleans issue. You know, if it's hurricanes here, it's flooding there, it's wildfires there, it's not just one city, it's not just one state.

[Carolyn Kuski]

And here's where it gets doomsday, right? We're all used to hearing the hottest year on record, hottest month on record. If you flip that and say that means this summer was the coolest you might see in your lifetime, that I think starts to drive home what we're dealing with.

[Umair Irfan]

There's really no way around it if you're going to be facing more sea level rise, more flooding More wildfires, you really need to find a way to reduce those overall risks.

[Meredith Hodnot]

And the insurance industry might be in a unique position to do just that. It may seem like our current insurance crisis is locked in the inevitable outcome of math equations and catastrophe models, but the insurance industry has leverage to reduce our overall climate risk.

[Umair Irfan]

They're very powerful players because they're sitting on giant piles of money. Trillions of dollars of capital essentially is running through these companies. So, like, insurance companies are a lot like banks in that regard. Like, they don't just put your premium money in a vault and save it for a literal rainy day, they do invest it. Reinsurance companies are especially investing in clean energy companies. Like they are trying to promote investments in businesses and in practices that they think are going to reduce risks over the long term.

[Meredith Hodnot]

In the short term though, climate disasters, from big name hurricanes to local hail storms are going to be a bigger and bigger part of our lives. But there's also real opportunity here for insurance companies to help us lower our exposure to these disasters.

[Carolyn Kuski]

There's a really big opportunity for insurers to lean in and helping their policyholders and after a loss, to rebuild in a way that's more resilient to say, okay, now you need to repair, but let's do it in a way that is making your home safe for the future and the future risk that you're going to face.

[Meredith Hodnot]

And maybe by putting all these pieces together, we can get out of this crisis, look risk in the eye and stabilize the insurance market right when we need it the most.

[Carolyn Kuski]

There's nothing a silver bullet answer. There's not a perfect program to implement or product that's going to solve everything. There's not some new standard to design to because risk is going to keep changing. What we need is a shared culture of risk management, which means bringing people into the insurance conversation that are new to it.

[Meredith Hodnot]

This episode was reported by Umaira Fan, produced by me, Meredith Hodnot and edited by Matt Collette with help from Jorge Just and Noam Hassenfeld. Sound design and mixing from Christian Ayala, music from Noam and fact checking from Anouk Duso. And as always, thank you to Brian Resnick for co founding our show. If you have thoughts about the show, please send us an email. We're@ unexplainableox.com we'd love to hear your thoughts about the show and if you can please go out, leave us a review. Leave us a rating. It really helps new listeners find the show. Unexplainable is part of the Vox Media podcast network and we will be back for very soon with another episode about everything that we do not know just yet. We all do it. You have a night for yourself, but don't like the sound of the silence, so you turn on the TV just for the ambiance. It's a little trick that helps you feel like you've got company and aren't alone. And other insurers, well, they may make you feel alone, but when you switch to Geico, you've got claims reps available

[Umair Irfan]

around the clock, so whenever you need,

[Meredith Hodnot]

you'll have people around to help. And let's turn on the washing machine

[Umair Irfan]

just for good measure.

[Meredith Hodnot]

Isn't that soothing?

[Joe Scuba]

It feels good to have support.

[Meredith Hodnot]

It feels good to Geico. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block. Or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it, ready to make anything online make sense. There's no place like Chrome. Check Responses Setup required compatibility and availability various 18 plus.