AJ Jones is a writer and creator of art, expressing herself across different mediums. She embraces her neurodivergence as a unique way to view the world in hopes of creating a better future. She first published this essay on her Substack newsletter, Blue Dot Thoughts.
I recently saw an Instagram video highlighting NASA scientist Dr. Kate Marvel, who had been trying to convince her conservative father about climate change. She explained that he finally came around, not because of her data or research, but because capitalism is saying it’s real.
Every insurance company has climate scientists on staff and insurance companies are all pricing in climate risk. There is no financial incentive for them to do that if it wasn’t real. If it wasn’t real another insurance company could come along, undercut the market and offer insurance at much cheaper rates, but they don’t do that because they know that it’s real.
Her father finally conceded, “Well, if capitalism says it’s real, it’s real.”
Hear Dr. Kate Marvel tell her story.
A 100 PERCENT INCREASE?!
I own my home outright, so my insurance isn’t tied to a mortgage escrow account. I pay for my policy on a quarterly basis. As the rates go up I know immediately.
This past year my homeowners insurance has more than doubled. The increase has nothing to do with property value. I have never made a claim. So, one afternoon I went to sit down with my insurance agent and talk about it.
He was on the phone when I walked in and motioned for me to take a seat. A classic rock station played in the background as I settled into the chair. Giving me a chance to look upon the Xeroxed signs I had been seeing around so much this year, in businesses of all sorts, attempting to explain the rise in prices.
Once he got off the phone and turned his attention to me I skipped the pleasantries and gently spewed my question. “Why has my homeowners insurance more than doubled in the past year?”
“Everyone’s rates are going up, and your company maintains one of the more reasonable rates.”
Standard and not the answer I was looking for. “But why?” I pushed.
“The Consumer Price Index.”
I prodded, “So, supply and demand. Does climate change have anything to do with it?”
“Oh, I don’t think so. Replacement costs of materials, availability of materials, transportation costs to get the materials. It all adds up.” I sensed a lack of confidence in his answer. Not that he was being dodgy, but more that he was trying to reassure me or make me feel better about the situation.
I STARTED THINKING…
I have a background in mortgage and finance, specifically in loan servicing. (I was working for a subsidiary of Warren Buffet’s Berkshire-Hathaway the year Hurricane Katrina hit.) While I didn’t handle the escrow account management for insurance or property taxes, I picked up a lot working with that department when problems arose.
Additionally, I have personally held mortgages with escrow accounts, mortgages where I paid for these items separate from the mortgage (an option I choose during a refinance), and as mentioned, no mortgage and paying for these items directly. I remembered that escrow accounts are estimated annually for the coming year around the loan’s anniversary month.
Suddenly my blood ran cold as I began to understand.
PRECARIOUS POSITION
Homeowners who have escrow accounts will be in for a shock, if they haven’t realized already. That’s because if there is a discrepancy between what was estimated and the actual premium this past year, they will have to pay the difference; not to mention the dramatic increase for the next period.
My insurance agent admitted that he had to pay an unexpected $800 because is mortgage escrow estimate fell short.
What a precarious position. Suddenly people are at risk of being priced out of their homes due to insurance hikes alone, without even factoring in any increases in property values. At the same time, the price for basic essentials continues to rise.
Adding to the problem, many who enjoyed those coveted federal or state government jobs, or worked in once-secure manufacturing are now, en masse, seeking employment. And the enhanced tax credits for Affordable Care Act policies are about to expire, meaning many families will pay hundreds more (or in some cases thousands) for health insurance every month.
The question is: If people don’t have jobs equivalent to the ones they lost, how can they even begin to recover?
Of course, this is where we see the “trickle down” that conservative politicians (starting with President Ronald Reagan) have promised for decades. Only what is trickling down is not the economic prosperity promised, instead the very opposite. In fact, a more apt analogy is the falling of dominoes.
Lyle Lewis is the author of Racing to Extinction
TIPPING POINTS
At the same time, small business owners are feeling the economic strain on two fronts. For example, in the past year the groomer where I take my pets has doubled her prices. She, too, has a Xeroxed sign displayed, apologizing for the rise in costs.
She rents the building where she does business, and is also being affected by insurance hikes. The building owner has had to raise the rents to offset the amount they are now being charged for property insurance. She has had to raise her prices in order to do business.
Only it doesn’t stop there. At night she goes home where her homeowners insurance premiums have increased along with food prices and (soon) Affordable Care Act health insurance premiums. To pay her own bills, her only recourse is, again, to raise the prices at her business.
At what point does the economic tipping point happen, pricing her out of doing business? Economic hardship is affecting everyone. When will people no longer be able afford to groom their pets, or have to cut back on the frequency? At what point will she no longer have the client base to keep her doors open?
OWNERSHIP IS NO GUARANTEE
Equally disturbing is the fact that people can own their home outright and still face the possibility of being unhoused. They could lose their home if they can’t afford to pay the property taxes.
Or, if they can’t afford to pay for homeowners insurance, they risk losing everything should there be a devasting weather event.
“IF CAPITALISM SAYS IT’S REAL…”
People can deny climate change exists, because there have always been weather related loses. In Iowa, people tend to think we are somehow safer because there’s a low risk of wildfires, and the likelihood of hurricanes is nil.
As we have witnessed though, most recently in 2024, tornadoes and flooding are becoming increasingly severe. And even if our state never had another weather related event, climate change would still affect us economically. There is no escaping that.
No matter what you choose to believe about climate change, capitalism is a believer. Sadly, capitalism is also driving the crisis.