Insurance and California Wildfire Risk Discussion with Nancy Wallace & Robert Engle | VRI 2024

Fireside chat with Nancy Wallace, UC Berkeley Haas (moderated by Robert Engle)
The Volatility and Risk Institute hosted its annual conference on Friday, April 26, 2024. The topic was "Insurance and Rising Climate-Related Risks"
Conference Theme
Insurers have for centuries written policies that cover losses from storms, floods and fires. Indeed the modern concept of property insurance, to mutualize the risk of loss -- or spread it across the insured population -- followed the Great Fire of London, which in 1666 consumed more than 13,000 houses.
But in the face of intensifying losses, insurers are raising premiums, denying coverage or pulling out of markets. Is climate change responsible? Is this a case of market failure with misaligned incentives, or is the market appropriately sending a signal that activity must withdraw from high-risk venues? Consumers, insurers and their regulators need to understand whether and how climate change is affecting the insurance market, in terms of availability, pricing, take-up, and financial resilience of the insurance sector.
This conference will explore the growing gaps between the risks of climate change and the capacity of insurance and reinsurance to price and manage them. It brings together insurance providers, clients, regulators/policymakers and analysts to understand the gaps and discuss remedies to reduce them, including incentives to build resilience through adaptation and the appropriate role of government to backstop losses.