Anchor: Climate Week kicks off in New York City with a heavy focus on data center power demands. The insurance sector is also rethinking its playbook. A new report from California Forward and Insurance for Good details how underwriters can pivot away from reactive disaster payouts and instead start financing proactive climate resilience. Now, suggested strategies include premium discounts for loss reduction, as well as providing build back better coverage and guiding property and local governments towards smarter land use planning. Well, joining us live here at the New York Stock Exchange to break this down is Jeff Gitterman, managing director for Gitterman Asset Management. Jeff, good morning. Thank you so much for joining me.
Jeff Gitterman: Thanks for having me.
Anchor: Well, it's quite the week here in New York City. A lot of gridlock, not just around the UN as the General Assembly high-level meetings kick off, but Climate Week. So what are some of the key debates this year?
Jeff Gitterman: You know, everything really has moved. Started last year a little bit to resilience and adaptation. The only thing it seems like you can talk about at a conference this year is resilience, even more than adaptation. The whole idea of mitigation, while still an undercurrent, unfortunately has been kind of put to the backside as regulation seems to put a damper on what you can do on the mitigation front. So it's resilience, resilience, resilience, and underneath that a lot of talk about insurance and what insurance companies can do to help shift the tide on adaptation and resilience planning.
Anchor: Yes, and resilience seems to be the key word of 2026. We have a few months to go until the end of this year, but when it comes to this report that just came out and what you mentioned regarding the insurance industry, give us your sense of risk transfer versus risk reduction.
Jeff Gitterman: So as always, California seems to be leading the way, at least on studies. So a lot of this is not put into practice yet, but a lot of what insurance typically does is pays for things after the disaster happens, and one of the bad things is that it typically rebuilds back the same way that it was built the first time the disaster happened because insurance risk is supposed to be a very rare risk with a large expense. Now because of climate change, these rare risks are becoming more common risks, so the insurance companies are rethinking their playbook and looking at how they could build in resilience kind of points or benefits up front in insurance sales and insurance planning. Certainly parametric insurance, where they're insuring disasters separately through different pools, is one of the ways, but really what companies can do, businesses and homeowners, to really shore up their properties is becoming a hot topic, especially around Climate Week this year.
Anchor: Yes, and you mentioned California, so I do want to zoom in on state-level regulation as well as policy leadership. So I think the key here is keeping coverage accessible as well as affordable. So what are the key takeaways?
Jeff Gitterman: And the problem is that insurance is going more and more to the state because of the FAIR Act and other plans that California and Florida are dealing with, and states are at risk of going bankrupt because the costs are getting too high for them to insure. So how do you transfer that risk down? How do you make sure that the right people are paying for the risk? As of right now, every homeowner in California really is subject to the same types of costs for homeowners insurance, but some homeowners are building really risky areas and some homeowners are not, and that could be risk of fire, could be risk of storms. El Niño is coming. They've already declared a state of emergency in California because of the expected rainfall that they look to see. So how do you start allowing in a state people who are willing to take more risk to pay for that risk and others that aren't taking as much risk, or people that are shoring up their property, doing brush clearing, putting on a stronger roof? Those people get discounts on their insurance programs for the work and effort that they're putting into their homes that will ultimately cost the insurance companies less money down the road.
Anchor: Yes, so very quickly, I do want to expand on that since you mentioned the American homeowner as well as the consumer. So what steps can they actually take?
Jeff Gitterman: Well, the American homeowner can start writing their governor, their state senators, and asking and demanding for discounted premiums based on resilience or adaptation planning or efforts that are put in. There's a lot of groundswell happening. A lot of consumers are asking for it. Insurance companies want to do it. They need to get the state senate and Congress on board to start shifting the regulations and the laws to make this a reality. But we're close and getting closer every day, unfortunately, as we see more disasters and as we see insurance companies suffering large payouts.
Anchor: And finally, before I let you go, I do want to get your perspective on what's happening between insurers as well as realtors given the reality of what's unfolding not just in the US but also across the world right now. What do you think needs to happen and what are you hoping some of the conversations at Climate Week will actually bring about?
Jeff Gitterman: I'm interviewing Matthew Abby from First Street on Thursday at the keynote at the Munich Re conference, so I'll get back to you next Monday on what the answers are. But the problem is that realtors don't want big upfront disclosures on properties about the flood risk and other things. It's buried into the mortgage documents, so people are going to read it and see it anyway because the banks fully disclose in the mortgage documents the risk of flooding in those areas. But what we need to see is a lot more transparency because without transparency we can't manage the risks.
Anchor: Well, Jeff, I really appreciate your time. I look forward to speaking with you after Climate Week wraps up here in New York City.
Jeff Gitterman: Thanks for having me on.
