Insuring your home in Colorado can cost $40,000 as the climate crisis wreaks havoc on the market, one insurance CEO said

• Insurance company CEO Oscar Seikaly has seen premiums soar recently for some Aspen homeowners.
• A $5 million home used to carry a $7,000 yearly premium, but that's increased to $40,000, he said.

This as-told-to essay is based on a conversation with Oscar Seikaly, CEO at NSI Insurance Group, which is based in Florida but underwrites policies nationally, about skyrocketing insurance premiums and how unpredictable disasters around the country raise prices for everyone. The conversation has been edited for length and clarity.

Over the past 10 years, insurance premiums have changed dramatically.

The prediction back then was that the California wildfires would spread to Colorado, and that's already started to happen. Two years ago, a really bad wildfire came very close to Aspen, and that triggered premiums to go up tremendously.

Now, I've seen premiums go up at least three times. In the past, you were able to insure a $5 million home for $7,000 per year. Now that's $35,000, $40,000. Insurance is still available, unlike some places like Florida, but you have fewer options.

One of my clients had a $6,500 policy on a multimillion-dollar home in Aspen. He'd been renovating it for the past year and a half and when he was done, his premium was $35,000. He was like, "What do you mean? I know there's an increase but it shouldn't be that high."

I showed him the responses from all of the companies. Most didn't even want to insure it at all because they already have too much business here. They don't want to add more houses.

He was from Florida, so he's seen that movie before. His shock was like "It's also happening here? Why here?"

Every house in Aspen is vulnerable. Many of the houses are far from a fire station. The insurers worry that by the time the fire truck has arrived, the house will already be gone. And that's a $20 million hit for insurers.

Take the average house in Aspen: You have $5 million for the house, $3 million for the contents, another $2 million for loss of rents. You have another $1 million for landscaping.

The exposure is very high. Wildfires have no mercy.

The climate crisis makes disaster more unpredictable, and everyone pays for it

In the past, you have actuary and insurance companies predict what an insurance company's going to pay in the next five years and, based on that, they come up with a rate. They used to predict pretty accurately what was going to happen.

Predictions have not been as good as they should be in the last few years. Everything has been a surprise. They're in panic mode.

Reinsurance costs have gone up tremendously. All these insurance companies have to buy from reinsurance companies and there's only three or four main ones in the world.

When reinsurers say, "Well, this year costs are going up 60%," what happens is the insurers have to pass that on to the policyholders. Now policyholders have an increase in their premiums because the reinsurers are experiencing disasters all around the world.

It's not sustainable to just charge Northern California, where there's increased risk. The reinsurer basically spreads the risk. Everybody will end up paying for it.

Right now, the increases are just reaching homeowners with the highest limits of tolerance. When you buy a $5 million house or a $10 million house, paying $30,000 or $20,000 a year is not going to make a difference.