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Climate Change Fuels Insurance Crisis as Extreme Weather Becomes New Normal
The insurance industry is facing unprecedented challenges as climate change intensifies the frequency and severity of extreme weather events. Traditionally, insurers relied on probability to assess risks and set premiums. However, with disasters like storms, floods, wildfires, and hurricanes becoming almost annual occurrences, the business model is under severe strain. Rising claims have led to skyrocketing premiums, making insurance unaffordable for many and forcing insurers out of high-risk markets.
California’s ongoing wildfire crisis is a stark example of this trend. Wildfires that erupted in Los Angeles County in January 2025 burned over 23,000 hectares, killed 29 people, destroyed 16,000 structures, and displaced thousands. Typically, the region’s wildfire season occurs from June ...