In a recent article, titled “Why climate risk could affect your credit score for buying a home,” CNN’s Andrew Freedman describes a new report by FirstStreet that claims to show how “climate risk” could impact credit scores and mortgage lending due to an alleged increase in the frequency and severity of weather-driven mortgage foreclosures. This narrative is highly misleading, if not outright false. The claim that climate risk is a new and emerging driver of credit risk ignores fundamental climatic and economic realities – namely, extreme weather has not become more common or severe. In addition, the surge in insurance claims in coastal areas is driven by rising population density, development, and escalating property values, not climate change.
CNN and FirstStreet present the concept of “climate risk” as a quantifiable, standalone factor that can be measured and projected in the same way as credit scores or debt-to-income ratios. But “climate risk” is a nebulous term, not one scientifically validated or even clearly defined. It conflates weather events with long-term climate trends. Weather is immediate, measurable, and historically recorded – hurricanes, floods, tornadoes. Climate, on the other hand, is a statistical average of these events over 30 years or more. The term “climate risk” is a misleading invention designed to imply that weather events are becoming more severe or frequent, despite a lack of supporting data.
The data on for the severe weather events that cause the most damage do not support FirstStreet’s or CNN’s claims of rising climate change driven costs.
Hurricane Frequency and Intensity:
- NOAA’s historical hurricane data demonstrate no significant increase in the frequency or intensity of hurricanes over the past several decades. The NOAA Atlantic Hurricane Database (HURDAT) provides comprehensive data showing that year-to-year variability is typical, but as demonstrated by Climate at a Glance in Figure 1 using that data there is no long-term trend of increasing storm severity.
- NOAA’s State of the Climate: Hurricanes and Tropical Storms reports further confirm that there has been no statistically relevant upward trend for the number of major hurricanes (Category 3 and above).
Flood Frequency and Severity:
- According to NOAA’s Billion-Dollar Weather and Climate Disasters database, flooding events have not increased in frequency when adjusted for population and property value growth. The primary driver of increasing flood-related insurance claims is the expansion of high-value properties developed or expanded in historically flood-prone areas.
- Detailed storm and flood event data from NOAA’s Storm Events Database clearly show that the apparent rise in flood-related damages is largely due to increased asset concentration in vulnerable coastal zones.
Tornado Frequency and Intensity:
- As seen in Figure 2 below, NOAA’s Storm Prediction Center (SPC) data demonstrate a declining trend in the frequency and intensity of strong tornadoes (EF-3 and above) over recent decades. The slight uptick in reports of weaker tornadoes is primarily due to better improved detection technologies, not an actual increase in tornado frequency.
The increase the total number of reported weather-related insurance claims in NOAA’s Storm Events Database is directly attributable to the increase in and concentration of more people and higher-value properties in disaster-prone areas like Florida, Texas, and California – not to an increase in the number or intensity of weather events. When adjusted for inflation and population growth, the supposed rise in climate-driven insurance losses vanishes.
Why would FirstStreet inaccurately describe weather-driven losses compounded by economic development, as losses due to climate risk? The answer lies in its target audience – financial institutions, mortgage lenders, and insurance firms pushing ESG criteria and seeking justification for higher premiums and stricter lending criteria.
FirstStreet’s report titled “Climate, the Sixth ‘C’ of Credit,” frames climate-driven credit risk as an emerging financial threat, projecting that mortgage lenders could face up to $1.2 billion in annual losses by 2025, rising to $5.4 billion by 2035 due to extreme weather events. But this projection relies on speculative modeling of the future rather than hard data reflecting actual trends. It fails to account for the fact that insurance claims are naturally higher in areas experiencing significant population growth and real estate inflation – particularly in coastal states where waterfront properties are among the most expensive and sought-after in the country.
FirstStreet’s report even admits that foreclosure rates are highest in areas with rapidly appreciating property values and high population density, particularly in coastal areas where new developments have expanded into historically flood-prone zones. Climate change has nothing to do with these losses and foreclosures.
The report cites Hurricane Sandy (2012) as a prime example of “hidden credit losses” linked to climate impacts, claiming that lenders underestimated loan defaults by over $68 million due to flooding in areas outside FEMA flood zones. Yet, it neglects to mention that Sandy struck at a time when property values in coastal New Jersey and New York were surging. Thus the real estate bubble, not the hurricane, was the main driver of foreclosure losses, so no climate risk signal here.
FirstStreet’s report is less an actual risk assessment tied to long-term climate trends and more of a marketing tool, crafted to promote the proprietary “climate risk” data products it developed and hopes to sell to financial institutions. By creating a new “C” of credit – “Climate” – the company is positioning itself as the indispensable analyst and broker for the financial sector’s ongoing monetization of climate alarmism.
Why does CNN’s Freedman uncritically promote FirstStreet’s questionable narrative? Perhaps, because alarmist headlines drive clicks, and sensational claims about “climate risk” are more compelling than the mundane truth that coastal real estate is overpriced and overbuilt.
Wrongly scapegoating non-existent “climate risk” allows adjusters, insurers, and lenders justify higher premiums, interest rates, and stricter credit standards while diverting attention from the actual causes of rising mortgage costs and insurance rates and claims. And, by failing to scrutinize FirstStreet’s “Climate the Sixth C of Credit” report, Freedman and CNN are acting more like press agents for the climate-industrial complex than journalists discovering and presenting the truth. Ill-defined “climate risks, are not the real risks in this story. Rather the real threat is the financialization of fear and the desire to virtue signal while profiting handsomely on climate change, using speculative climate models to justify predatory lending and insurance practices.
Anthony Watts is a senior fellow for environment and climate at The Heartland Institute. Watts has been in the weather business both in front of, and behind the camera as an on-air television meteorologist since 1978, and currently does daily radio forecasts. He has created weather graphics presentation systems for television, specialized weather instrumentation, as well as co-authored peer-reviewed papers on climate issues. He operates the most viewed website in the world on climate, the award-winning website wattsupwiththat.com.
Originally posted at ClimateREALISM
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Currency devaluation, aka price inflation, driven by government deficit spending also has a large role that few discuss.
Of course. Fiat money always gets devalued as it has no intrinsic worth. Real wealth comes out of the ground, not out of a printing press.
And of course the climate cultists hate anything coming out of the ground or even timber coming off the ground. Mustn’t disturb Mother Nature. They’ll tolerate organic farming as long as the farmer didn’t vote for Trump. 🙂
I just had my house insurance renewed (in G.B.) and the premium has gone up by 20%. When I asked why I was told it is due to the increased cost of rebuilding materials and increased staff costs. My tradesmen friends confirmed this, and quotations from other suppliers of insurance were for similar amounts.
Strangely, though, the premium on the insurance on my static holiday caravan has gone down by 7%.
?????
Minimum wage has something to do with it.
The true minimum wage is zero and lots of people are happy with that. Strange for a country with free K-12 school for all. Maybe has something to do with free food and housing.
Property insurance if not all insurance is a rip-off here in MA. If a property value doubled- that wouldn’t justify doubling the insurance though they’ll claim that. There are other costs that the insurance company has that didn’t double- so they can’t justify having what appears to be a linear relationship to property inflation and their policy cost. It’s gouging. I complain to my agent every year though it’s a lost cause. I’ve also complained to my state rep but they just ignore me.
“Wrongly scapegoating non-existent “climate risk” … justify higher premiums”
Obamacare era Supreme ruling: legal requirement to buy insurance = tax.
“climate risk” allows adjusters, insurers, and lenders justify higher premiums
Strike out adjusters. They don’t use the crystal ball.
climate adjusters? 🙂
I think those are the ones that want to block out the Sun and dump caustic soda into the ocean.
Let’s rewrite that opening statement:
In a recent article, titled “Why climate risk could affect your credit score for buying
a home,” CNN’s Andrew Freedman describes a new report by FirstStreet that claims
to show how “The Boogey Man” could impact credit scores and mortgage lending.
Story tip – interesting article, and funny too –
Why Do Leftists Think That Train Travel Is the Solution to Everything? – PJ Media
There’s a huge difference between Europe and the US that makes high speed trains practical there and not so much here. It’s the distances that you travel. While a European train traveler can indeed wax eloquent about travel between major European cities by train, in the US, a similar distance leaves you…
still traversing Pennsylvania.
No insult to Pennsylvania!
Additionally, high-speed rail doesn’t really work if the train has to stop at every intermediate town for political reasons.
Clearly, they want more high-speed trains to nowhere.
What makes the tornado story even more absurd is that in 2007 NOAA changed the Fujita scale to the Enhanced Fujita Scale.
Which lowered the wind speed for each class of tornado, the old scale showed an F2 wind speed of 113-157 mph….with the Enhanced Fujita Scale that would be a EF-3 wind speed of 136-165 mph. Under the old system an F-3 wind speed 158-206 MPH would now be a EF-4 wind speed 166-200 MPH or EF-5 wind speed 200 MPH and above
That should have made tornadoes since that time, seem stronger……
Did NOAA go back and adjust the past tornadoes ratings ….like they did with temperatures
It should be remembered that both the Fujita and the Enhanced Fujita scales are estimated wind speed based on the type and amount of damage caused.
(I don’t know if the cost of the damage is involved. If it is, it shouldn’t be.)
Really – making the data consistent wouldn’t support the narrative.
FirstStreet is an advocacy organization that is using “climate change bogey” to, justify higher insurance premiums. Many of their prognosis ignore Warren Buffett’s rejoinder that insurance rates are set yearly and can be changed if the underlying assumptions turn out be wrong.
Why are they doing this? Their main products are maps purporting to show flood prone areas that are not included in official government maps. They sell these maps to insurance companies so they can justify their rate hikes. They also have a complementary relationship with climate alarmist who use the maps to lobby for unjustified land use policies.
Motor Insurance premiums trend upwards every year – there’s always an excuse, like faked accidents, climate is just the latest.
They don’t care to mention the huge salaries of those at the top of the insurance industry.
“extreme weather has not become more common or severe”
A basic fact that cannot penetrate the brains of the climate cultists.
There is no natural or logical reason to treat insurance as a friend. You can analyse it in the following practical way.
The premiums that you pay can be split into funds to pay your claim; funds to employ the insurance company, with typically nice buildings and hordes of paid employees; and funds for your insurer’s investment purposes, over which you will normally have no control. Nice if it performs well, but that cannot be guaranteed.
With the investment funds, we commonly see insurers taking part in social engineering, using your money to play with fads like ESG and DEI and climate change, again without asking you if you agree with their choices.
Insurance is in two classes, voluntary and compulsory.
Voluntary: What happens to you if disaster strikes? If you have no insurance, you pay for it by lump sum, as opposed to the accumulated insurance instalments, diluted by the costly overheads above. People buy insurance because they fear the lump sum could break them financially. But, there are other risks that people face, that have no insurance on offer. Can you insure yourself against the unexpected costs of your 14 y o daughter getting pregnant? Would it be wise to insure against this, or simply face the slings and arrows of outrageous fortune?
Compulsory: Personally, I agree that this is really a tax. Take mandatory insurance against your home burning down. Is society really better off with a large, unproductive sector of insurance people in paid jobs to handle all the paperwork? This is a large overhead that most people will never be involved with because so few homes ever burn down.
I am in my 80s, so I have seen many of the variations over the years in the way insurance operates. The dominant changes are that insurers try hard to grow their importance, while at the same time they make it harder for a genuine claim to succeed. Profit dominates. I have seen home insurance contract documents grow from 5 pages of readable text to 180 pages of fine print lawyer fodder. (Try to work out the definition of “flood”.)
I have declined all voluntary insurance for many years now. We exist on old age pensions, where every scarce dollar matters. With no voluntary insurance premiums to pay, we are streets ahead and laughing. The next task is to get rid of compulsory insurance. I would like this, because it would take many people from dull, unproductive jobs and give them a go at work that improves the national economy, while destroying the extent of social fads using my money without my agreement.
What, you ask, will happen if an accident happens, I am uninsured, I am hugely out of pocket? In my case, there is family in which I have invested heavily to bring to their present state of success. I would have spent more if there had been no compulsory insurance.
Compulsory insurance is simply another tool of socialism/communism. “From each according to his means; to each according to his wants”.
Geoff S
California requires owners to carry a minimum level of insurance on their cars. Having been hit, twice, by uninsured motorists, I was glad that I had insurance – it covered our losses each time.
Insurance cover for a home is NOT compulsory here. If your home is mortgaged, the lender requires that the home be adequately insured.
Once the mortgage is paid off, it is up to the homeowner to decide.
Friends of ours lost their home recently in Altadena. They, as well as others in Pacific Palisades, are very glad that they had insurance on their homes.
Very nice Anthony.
If there’s a way to defray costs and payouts, the insurance companies will pounce on it.
So the non-existent climate crisis was tailor-made for them to jack up prices even if real estate values have been rising for longer than environmental catastrophes were adopted as a convenient excuse to raise premiums. As populations rose and more real estate came on the market, insurance premiums would have risen regardless; but if a mythical threat from climate change could be factored into them to demand even higher amounts from consumers, the insurance companies certainly wouldn’t miss the opportunity.
Good Lord. ARe 8 year-olds the only ones working for CNN?
You are optimistic.
There is an additional con in the FirstStreet / CNN alarmism. If I remember corrrctly, “Hurricane Sandy” didn’t make landfall. The damage was done by “Tropical Storm. Sandy”, which merged with other weather systems to form “Super Storm Ssndy”.