A report by First Street Technology Inc. reveals that worsening flood risks due to climate change are significantly increasing home foreclosure rates, primarily because standard home insurance often does not cover flood damage. The analysis of 55 extreme weather events from 2000 to 2020 found that 20 out of 29 floods led to surges in foreclosures, while foreclosures associated with wind and wildfire events were notably lower. The report emphasizes the urgent need for better flood insurance coverage and climate-adjusted credit models for financial institutions to anticipate losses more accurately.
The research highlights the need for financial institutions and regulators to adopt climate-adjusted credit models, as the risks linked to climate change grow.
Flood damage remains largely uninsured, which has led to increased foreclosures following flood events compared to those caused by wind or wildfire.
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