Trump Administration and Congressional cuts to climate protections, disaster prevention and recovery related efforts and agencies will impact home insurance, housing and financial stability, according to climate financial risk experts.
Participants from Americans For Financial Reform, the Union of Concerned Scientists, Public Citizen and a California county supervisor spoke in a webcast following the U.S. Senate Banking Committee's May 1 hearing on insurance markets and risk mitigation policies.
The Federal Insurance Office (FIO), with functions including
"This kind of data collection is absolutely critical to assess the depth, breadth and evolution of the insurance crisis," said Alex Martin, policy director, climate and finance, at Americans for Financial Reform.
Homeland Security Secretary Kristi Noem called for
"There is no way to overstate how devastating these cuts are going to be, and frankly, already are. Lives are already at risk. Counties, cities, local jurisdictions depend on these funds to both be more prepared to do the mitigation effort to keep us safe, also for the recovery, which is critical to get people back in houses when they've lost their homes," said Heidi Hall, District 1 Supervisor for Nevada County, California, northeast of Sacramento.
In addition, according to Hall, in disasters, local counties spend funds on relief efforts and have to wait for reimbursement by FEMA. The agency has taken up to five years to reimburse some counties, she said, and now those funds have been stopped.
"Counties themselves are being put in positions where it is incredibly difficult to continue to function without those reimbursements coming back, much less the funds that we need to continue to protect ourselves," she said.
Local governments will also have a harder time supporting insurance and housing markets affected by insurance company departures and non-renewals, explained Anne Perrault, senior policy counsel for the climate program at Public Citizen.
"Municipalities will continue to lose their tax revenue, struggle to make municipal bond payments as disasters multiply and insurers, lenders and residents leave," she said. "Municipal credit rating downgrades have begun. Most recently, S&P downgraded the Los Angeles Department of Water and Power. They put several entities in North Carolina and Tennessee on credit watch."
Relaying an observation by Federal Reserve chair Jerome Powell that Senator Tina Smith of Minnesota quoted in the Banking Committee hearing, Perrault added, "Ten to 15 years from now, folks in some regions won't have access to mortgage and other credit. That's stunning."
The capacity of the U.S. financial system is being exceeded and insurers are "hitting their limits," Perrault said. "Insurance withdrawals are a systemic risk that threaten the very foundation of the financial sector."
