California Insurance Commissioner Ricardo Lara (pictured) has released an in-depth report examining insured and uninsured costs associated with recent extreme heat events in the state.

The study, called “Impacts of Extreme Heat on California’s Population, Infrastructure and Economy,” which Lara’s camp called groundbreaking, underscores the urgent need for adaptive strategies to address the growing threat of extreme heat.

The cumulative cost of the seven extreme heat events considered was initially estimated at $7.7 billion, according to the report. Worker productivity losses were found to range from $7.7 million to $210 million per extreme heat event, with significant uninsured wage losses.

Additionally, infrastructure costs due to heat-related damage and delays ranged from $3.8 million to $35 million per event, primarily impacting roads and railroads. Health outcomes also disproportionately affected Black, Latino, and Native American communities, with higher rates of heat-related deaths and illnesses.

“Extreme heat is a silent, growing disaster that threatens our health, our economy, and our way of life in California,” said Lara. “This report highlights the staggering hidden costs of extreme heat events, underscoring the importance of our efforts to create a statewide heat wave classification and early warning system.”

“We must prioritize resilience-building efforts and innovative insurance solutions to protect our state from the increasing impacts and financial risks of extreme heat.”

The report provides a framework for assessing the true costs of seven major extreme heat events over the past decade, outlining the financial and human impacts.

Although some types of insurance, such as health insurance, workers’ compensation, and crop insurance, provide some protection, large gaps remain in traditional insurance coverage for heat-related losses. The report calls for the development of innovative insurance mechanisms and increased investment in adaptation and resilience.

He pointed out that current losses are largely uninsured, placing the financial burden on individuals and public entities.

“The data presented in this report is a wake-up call that we need immediate action to protect lives,” said Kathy Baughman McLeod, CEO of Climate Resilience for All and a member of the California Climate Insurance Working Group. “The far-reaching consequences of extreme heat require coordinated action across all sectors to accelerate equitable adaptation.”

The report emphasizes a multi-pronged approach to addressing the challenges posed by extreme heat. Recommendations include public-private sector collaboration to develop and implement strategies to reduce heat-related illness; exploring innovative insurance solutions to incentivize resilience to extreme heat and cover business interruption, infrastructure damage, and emergency services; and leveraging insights from case studies conducted by local governments to inform future planning and mitigation policies.

“As climate change worsens, the costs of extreme heat to our health, lives, and economy are mounting,” said Caitlin Rudner-Sutter, director of the California Environmental Defense Fund. “It is critical that California monitors and exposes the magnitude of the hidden costs.”

“Anyone who says California can’t afford climate action should read this report to see why doing nothing is not an option.”

What do you think of this story? Share your thoughts in the comments below.