Climate Change Fuels Rising Home Insurance Costs in Rhode Island
Several insurance companies in Rhode Island have either stopped selling home insurance or are canceling existing policies. These shifts are largely attributed to the increasing financial risks associated with climate change. Homeowners across the state are seeing higher premiums and fewer insurance options, particularly in coastal areas. State officials are advising homeowners to invest in property improvements, consider flood insurance, and prepare for escalating insurance costs.
“In the 45 years I’ve been an insurance agent, the homeowners’ market is the worst I’ve seen it,” said Ernie Shaghalian, a veteran insurance agent with Butler & Messier Insurance Agency in Pawtucket. He shared his insights with a panel of legislators, scientists, and policy experts during a meeting of the Legislative Study Commission on Climate Change Impacts and Solutions. The commission, established by Rep. Terri Cortvriend last fall, is examining how rising sea levels, coastal storms, and increased extreme rainfall are affecting life in Rhode Island.
Extreme rains are connected with the changes in the property insurance market, leading to increased costs for homeowners.
Elizabeth Dwyer, director of the state Department of Business Regulation, which oversees the insurance industry, noted that while Rhode Island is not experiencing the same crisis as states like California, Louisiana, or Florida, affordability is becoming a significant concern. “So while you can get insurance in Rhode Island, individual constituents are going to be complaining about their increases in premiums,” she stated.
The escalating challenges within the insurance market are drawing attention across the country. Dwyer highlighted years of accumulating problems, driven by a spate of natural disasters, which many scientists link to climate change. These disasters have forced insurance companies to make huge payouts.
A Senate Budget Committee report on the industry summarized the core issue: “The Climate-Driven Insurance Crisis is Here – and Getting Worse.” The report, released in December, when Sen. Sheldon Whitehouse, D-R.I., was still the committee chairman, analyzed the non-renewal rates across the nation and found that counties most exposed to climate-related risks—including wildfires, hurricanes, and flooding—are seeing the highest rates.
According to the report, Newport County in Rhode Island has one of the highest rates of non-renewal in the nation. Washington County in Rhode Island also showed up on that list. Shaghalian said that more homeowners are being forced to the Rhode Island FAIR Plan, which acts as a last resort for getting insurance, and said that premiums in the plan can be up to 50% higher than elsewhere. “There’s 2,000 more people insured in the FAIR Plan in Rhode Island than there were two years ago,” he said.
Dwyer stressed that property owners should focus on investing in better roofs, which can help prevent costly damages. She also pointed out that typical home insurance policies generally don’t cover flooding caused by storm surges or heavy rains. Flood insurance, often purchased through the Federal Emergency Management Agency, is essential.
“Unfortunately, the era of ignoring insurance costs is over,” Dwyer concluded.
