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Connecticut still has that insurance ‘vibe’

by Cedric Guzman

The Changing Climate and the Consequences for Insurance in Hartford

Connecticut has long been known for its pragmatic and fiscally conservative but socially liberal nature. This unique combination of traits has made Hartford the insurance capital of the world in the past. However, just like the city itself, the world is changing, and so is the weather. As I drove down Interstate 91 through Hartford, thoughts of various weather events flooded my mind: hurricanes in California, devastating floods in Vermont, boats floating down the Connecticut River, tornadoes in Massachusetts, and the Canadian wildfires that caused smoke haze in the region a few months ago.

While Hartford may no longer hold the prestigious title of the insurance capital of the world, there is still an undeniable “insurance vibe” in the city. It runs deep, reflecting the importance and influence of the insurance industry on the city’s economy and culture. As I passed through, this “vibe” struck me like a bolt of lightning. I couldn’t help but think about my own recent experience with a spike in insurance rates and how insurance has been a hot topic of discussion in Congress over the years.

At its core, insurance involves taking in money through premiums and paying out money through claims. The insurance business relies on assessing risk and maintaining a delicate balance between premiums and claims. During the “in-between” period, insurers invest these funds to earn returns. However, with the increasing frequency and severity of destructive and costly storms due to changing weather patterns, it should come as no surprise that insurance premiums are on the rise. While it may seem out of place, my conjecture is that the average citizen will only realize the reality of climate change when their insurance premiums start increasing and continue to do so.

Going without insurance is hardly an option for most individuals. Insurance is crucial for securing mortgages and auto loans, and the average person cannot afford to self-insure their property. We cannot simply stop the changing weather patterns or prevent storms from occurring. Furthermore, as we invest in expensive technologies to combat climate change, such as solar panels, AC/heat pumps, and electric cars, these advancements come with their own hefty price tags and associated risks.

Solar panels, for example, reduce carbon emissions from electricity generation but are susceptible to hail and wind damage. Electric cars, while environmentally friendly, rely on precious metals and contribute to wear and tear on our roads due to their weight and complex electronics. When it comes to property, the costs of rebuilding, including labor and materials, are exorbitant.

Where there is risk, insurance comes into play. Regardless of our beliefs about the source of climate change, we will all start feeling the financial consequences, and we may find unexpected motivation to address the issue right in our own Connecticut backyard: through the insurance industry.

In conclusion, Hartford’s historical significance as the insurance capital of the world is still evident in the city’s “insurance vibe.” As climate change continues to affect weather patterns and increase the frequency and severity of storms, insurance premiums are rising. This reality will ultimately influence the way we perceive and address climate change. Whether we like it or not, insurance may become a driving force for change as we grapple with the financial consequences of the changing climate.

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