When Dave Jones first started talking about climate change and what insurers should be doing about it some 15 years ago, the response could be thought of as something akin to a collective shrug.
There wasn’t much to say. Insurance policies were renewed annually, and the effects of global warming that would become bad enough to concern insurers were believed to be decades off. And for some in the business world, the words “climate change” were politically loaded; it wasn’t a much talked-about issue among the industry back then, particularly among U.S. insurers.
That viewpoint is in the minority in the industry nowadays, as insurers and reinsurers see their portfolios being increasingly endangered by more frequent and severe weather. U.S. insurers often cite “climate change” in their outlooks and reasons for rate requests, and global reinsurers have entire units dedicated to researching and finding ways to be better prepared for it.
A great example is the homeowners insurance crisis in California, being blamed, in part at least, to longer and more severe wildfire seasons. The situation has spurred numerous changes to state insurance regulations as carriers have pulled back from the state. Insurers across the globe are responding to climate risk in similar ways, by investing in enhanced risk modeling, withdrawing from or reducing coverage in risker markets, increasing premiums, and rewarding insureds for resilience and adaptation efforts.
Dave Jones
A lot has changed in the half-dozen years Jones has been gone from office. And for his part, he hasn’t relegated himself to the sidelines on the issue.
Jones’ time in office could be viewed through a number of crucial insurance narratives: Rolling out the Affordable Healthcare Act in California, launching an investigation into life insurer practices that led to nearly $10 billion paid to beneficiaries, standing up insurance for the state’s then-budding cannabis industry. But getting insurers and the insurance-buying public to see climate change as a real and imminent threat was arguably Jones’ darling.
Since leaving office after term limits ended his eight-year stint as California’s insurance commissioner, Jones has done most, if not all, of his work in the area of climate change and insurance.
Jones is currently director of the Climate Risk Initiative for the Center for Law, Energy & the Environment at UC Berkeley Law School. The policy think tank focuses on the impact of climate change on the financial system and what financial institutions, markets and regulators should be doing about it.
“It’s a continuation and expansion of the work that I pioneered when I was insurance commissioner around getting insurers to address the impacts of climate change on their underwriting and reserving,” Jones explained.
Climate Change
Back when he came into office in 2011, there was no throughline between climate change and insurance.
The environmental, social, and governance movement was in full swing worldwide. Most industries embracing ESG to fall in line or to appeal to the public were talking about how they were reducing their carbon footprints or their other socially conscious business practices.
However, the insurance industry wasn’t considered to be a major greenhouse gas emitter—not anywhere near the scale of industries like manufacturing or trade and transportation. And the threat of climate risk to their portfolios was beyond the horizon. Policies are written annually, so the extreme weather events and rising sea level worries believed at the time to be a long way off posed no threat whatsoever in insurer profits.
Jones already had an interest in climate change and the environment before becoming insurance commissioner. They were among the Democrat’s many platform issues as he made his political journey from a legal aid attorney to a Sacramento City Councilmember to the California Assembly to insurance commissioner.
Related: US Property Insurance Costs Hit New High as Disasters Worsen
So, early on after taking office, Jones said he asked the staff of the California Department of Insurance how insurers were responding to the impact of climate change on their underwriting, reserving and investing.
He found out there was next to nothing being done. He was hearing the same refrains: insurance and climate change were unrelated because the industry wasn’t a major greenhouse gas emitter and climate risk was decades away. He believed different, often siding with early climate change activist groups calling for the industry to take a look at a world they believed was becoming riskier much faster that many were aware.
Jones learned that the National Association of Insurance Commissioners in 2009 had promulgated a climate risk survey, but the concept sat unimplemented. So, at his first NAIC meeting, he approached other state insurance commissioners, and the conversations he had laid the foundation for an early coalition that included California, New York and Washington to implement the NAIC Climate Disclosure Survey in their states.
Jones also volunteered to set up a data portal at the CDI to collect the information from carriers to make publicly available. That effort evolved to incorporate the Task Force on Climate Related Financial Disclosure standards, which was stood up by the Financial Stability Board in 2015. That data collection effort has since grown to involve more than 30 state insurance commissioners.
In 2016, Jones helped launch the Sustainable Insurance Forum, a global network of insurance supervisors and regulators who are working on sustainability challenges facing insurers.
During his time in office, Jones also found himself at odds with the insurance industry over his calls for insurers to divest their fossil fuel assets. The industry was even less enthused when Jones began asking insurers to consider curtailing or halting their underwriting of fossil fuel projects.
Jones upped his pressure on insurers in 2017 when he ordered the launch of a new interactive database with extensive information on insurer investments in fossil fuels.
The Nature Conservancy
To be fair, his time as insurance commissioner may have seen as many detentes with the industry as fights. Now, without his powers as a regulator, Jones has come to embrace the carrot over the stick in the old motivational equation axiom.
Shortly after leaving office in 2019, he took a role as senior director for environmental risk for The Nature Conservancy, a global nonprofit environmental organization.
“I wanted to see if I could work with the insurance industry to demonstrate that nature and nature-based approaches to reducing risk can be accounted for in insurance modeling, insurance pricing and insurance underwriting,” Jones said.
Among its work, The Nature Conservancy is involved with placing insurance policies for natural features that reduce risk of loss for properties. In partnership with Swiss Re, the group in 2022 developed a parametric insurance product to help protect the Mesoamerican coral reef off the coast of Mexico’s Yucatan Peninsula to reduce the risk of loss and magnitude of loss for communities protected by the coral reef—reefs act as a natural breakwater, absorbing much of wave’s energy, reducing erosion and property damage.
The policy pays based on objective triggers like the intensity of a storm, and payouts go to restore the reef. That insurance policy has been replicated for coral reefs in Hawaii and other locations, and is now available to restore coastal mangrove forests, which serve as natural barriers by absorbing and reducing the energy of waves and storm surges to prevent flooding and erosion.
Related: Older Homes for Sale in California Now Come With Wildfire Warnings
There’s another cause driving California’s wildfire-driven homeowners insurance crisis in addition to the conditions that have made for more frequent and severe blazes in the state: forest management.
The state’s forests are denser than they used to be, with small trees and brush packed closely together. According to the Public Policy Institute of California, removing some vegetation from dense landscapes through prescribed fire or thinning can help restore forests to their historical conditions. “Wildfires that occur in restored forests and woodlands are typically less severe and have less impact on communities,” the institute stated in a recent blog urging the public and decision makers to understand that there is more than one solution to California’s wildfire challenges.
Jones’ work with the Nature Conservancy also involved forest management in Western U.S. forests. A partnership he led while at The Nature Conservancy with Willis Towers Watson resulted in a paper published in 2021 linking forest treatment to insurance benefits by reducing wildfire risk.
“We demonstrated that both for traditional indemnity insurance as well as for parametric insurance, the models technically are able to account for the risk reduction from landscape-scale forest treatment,” Jones said. “The hope was that by publishing these results and showing that the existing models used by insurers can account for this, that insurers would start voluntarily incorporating it into their pricing and risk scoring for purposes of writing and renewing insurance.”
That didn’t happen. So, Jones took the next steps when he left the Nature Conservancy for his current role at UC Berkeley to try to place an insurance product “written expressly because of, and took into account, landscape-scale forest treatment.”
Jones added: “And we did it. We placed the first wildfire resilience insurance product in the country.”
The policy was written for the Tahoe Donner Association, a 6,500-plus member homeowners association in the middle of a heavily forested area of Northern California. The parametric insurance policy covers 1,345 acres of forested land owned by the association.
Partners on the project included Willis, The Nature Conservancy and the Center for Law, Energy and the Environment, where Jones is director. Structured by Willis, the $2.5 million wildfire resilience insurance coverage was underwritten by Globe Underwriting. It was developed and placed to demonstrate lower premium pricing and improved availability where ecological forest practices, such as tree thinning and planned fires to clear out flammable vegetation, has been proven to reduce wildfire risk, according to the partnership.
“The insurance was placed in a forested area where other insurers, because they are not accounting for forest management in their risk modeling, are not renewing and declining to write new insurance,” Jones said. “The big win is that the insurance was written at all—again because we demonstrated that forest management can be taken into account in insurance modeling and that it reduces risk. And for good measure, we got a 39% reduction in premium cost and 84% reduction in the deductible.”
California Insurance Market
There are multiple proposed solutions coming to try and soothe the state’s ailing homeowners insurance market, which has seen numerous carriers request large rate hikes and stop writing new policies, as insureds head into the state’s insurer of last resort and into surplus lines.
More than one cause for the market’s condition is also in play. But it should come as no surprise that Jones puts the blame for the California homeowners insurance crisis at the feet of climate change, and that he believes that addressing the crisis and global worries over the insurability of at-risk properties must ultimately come from a worldwide, dramatic reduction of fossil fuel reliance.
To back up his assertions, Jones pointed to the positive underwriting returns collectively for carriers in the state’s homeowners multi-peril segment in 2019-2020, 2021-2022 and 2023. The rates that insurers were getting were sufficient, he said.
“But what’s happened in the last six years since I left office is the background risk has gotten a lot worse, and that’s because global temperatures continue to rise,” Jones said. “We have drier and drier conditions. We’re not doing enough fast enough to manage our forests, but even with that, the background increase in temperatures and the drier conditions in the West—not just California—are driving more of these catastrophic events. Sadly, we saw that manifest in 2025 with the January 2025 L.A. wildfires.”
He added: “So, I think that the crisis has really taken off in the last six years. It’s caused insurers to accelerate nonrenewals; it caused them (starting around) 2023 to stop writing new customers.”
The response from the state’s insurance regulator has been to modify some portions of the existing rate regulations to allow reinsurance costs to be included in rates, to enable catastrophe models to be used to factor in homeowners rates and to relieve the insurers of more than $500 million of exposure to a FAIR Plan shortfall.
Those were among numerous changes called for by California insurers, who said such steps would make them more willing to begin writing homeowners policies again in the state. In its most recent filing for a 6.9% rate increase, Mercury Insurance indicated that it’s the L.A.-based carrier’s intention to begin to write more new customers and to renew more of the wildland urban interface risk.
Related: KCC Completes Review of California Wildfire Model
Jones sees the early results of the regulatory changes as a good first step.
“So, I think that’s a positive development,” Jones said. “But I think, unfortunately, the background risk continues to grow, and I fear that in the long run, there isn’t some insurance regulatory dial or policy knob that we can turn that ultimately is going to keep insurance available, because the background risk keeps growing and climate change is basically creating new primary perils to kill us and injure us and cause insurers huge losses.”
Jones believes severe convective storms are providing an ominous example of the changes the world is seeing and the growing dangers to people and to insurer profits being wrought by climate change. These storms in recent years have caused greater damage compared with historic averages.
At least 41% of insured losses in 2024 ($64 billion) were from severe convective storms, with these events costing global insurers $143 billion in 2023 and 2024, according to a report from Gallagher Re.
“I don’t remember anybody talking about severe convective storms when I was insurance commissioner,” Jones said. “Now, severe convective storms are like 40% of the insured global net cat losses. That was never a primary peril.”
The storms are having a noticeable impact on insurance. In 2023, five insurance companies stopped writing new policies in Iowa, citing increased losses from these type of severe weather events, as well as higher reinsurance costs and rising repair costs—an example of a broader market shift from insurers in response to climate-related risks.
While Jones believes the ultimate solutions must be to reduce greenhouse gas emissions, in the interim he continues to cheer on and help develop climate-related legislation coming from states, like House Bill 1182 in Colorado. HB 1182 requires property insurers that do not incorporate property-specific and community-level mitigation actions into their models to provide discounts to policyholders who demonstrate actions taken on the property to reduce the risk of loss.
The act also requires property insurers that use a wildfire risk model, a catastrophe model, or a scoring method to assign risk to:
For the purposes of underwriting homeowners and other property insurance policies, adhere to specific requirements to share information with the insurance commissioner and the public;
Submit available data concerning the models and scoring method to the division of insurance as part of the insurer’s rate filings;
To ensure that specific factors are either incorporated in the wildfire risk model, catastrophe model, or combination of models or are otherwise included in the insurer’s underwriting and pricing.
“I think the most important insurance law to pass this year and in many years is House Bill 1182 in Colorado, which was sponsored by Insurance Commissioner Mike Conway,” Jones said. “Colorado has decided ‘Look, enough is enough, we can no longer wait for the insurance industry to do this on a voluntary basis we’re going to require you to file your risk models with us and we’re going to require that they account for property-community and landscape-scale mitigation,’” Jones said.
What’s Next? Politics?
Putting aside his climate change focus and current work, Jones was asked what’s next for him. Is a return to politics in the cards?
“I had the privilege of serving as a city council member, a state Assembly member and the insurance commissioner, which I continue to believe is the best job in public service, so I have no plans to run for public office again,” Jones said. “I think it was a privilege to get to do it. There was a time an opportunity for me to do it. I think I made a contribution, but now my focus is on my work at the center and other projects to try to continue to draw attention to and advance the goal of transitioning to a net-zero economy and net-zero financial system.”
He added: “And in some respects, I think I’m better positioned outside of elected office to push for those things that I might be in elected office. So, no, I’m not running for public office again.”
Topics
California
Climate Change