Insurance companies are in the business of predicting future loss, and so must ensure that they reserve for such events. What happens when history is no longer a reliable guide for predicting the future?

“If climate change causes more volatile frequent and extreme weather events, you’re going to have a scenario where these large providers of financial products — mortgages, home insurance, pensions — cannot shift risk away from their portfolios,” Rostin Behnam of the Commodity Futures Trading Commission told The New York Times last year. “It’s abundantly clear that climate change poses financial risk to the stability of the financial system.”

More frequent floods, droughts, wildfires and hurricanes, as well as sea level rise, are the inevitable consequences of a warming planet, and their impact on everything from housing to food production are as far-reaching as they are frightening.

Pacific Gas and Electric, facing some $30 billion liability for damages from two years of California wildfires — a tab exceeding its insurance and assets — had little choice but to declare bankruptcy. “Today PG&E is confronting this risk from wildfires,” Michael Wara of the Climate and Energy Policy Program at the Woods Institute for the Environment at Stanford University told The Times. “Tomorrow it could be insurance companies . . . that are overwhelmed after an unexpectedly intense hurricane or series of hurricanes.”

Though much depends on the future rates of greenhouse gas emissions and the resulting severity of future warming, climate change is expected to decrease domestic production of corn, soybeans, and wheat. Higher prices, and consequently higher premiums (and subsidies), will inevitably follow.

Superstorm Sandy, in 2012, dealt a devastating blow to New York City, parts of New Jersey, and much of Long Island. Owing only to Sandy’s last-minute turn away from the South Fork, the storied Hamptons, where multi-million-dollar properties were too often developed practically to the ocean’s edge, escaped the worst of it. Nonetheless, it was immediately clear that higher, and perhaps much higher, insurance premiums would follow. How would the region bear a direct hit from a Category 5 hurricane?

Bowing to political pressure — specifically, constituents of legislators in coastal districts who would face drastically higher premiums — the National Flood Insurance Program, billions in debt due to years of disproportionate rates and repeated disasters, delayed enactment of the so-called Risk Rating 2.0 restructuring by a year, until October 2021.

If there is a bright spot in the insurance sector, the industry recognizes the threat climate change poses to its long-established business model. Some companies’ own practices are evolving as they simultaneously encourage policyholders to adapt and mitigate, and claimants to rebuild according to green standards.



Insure Our Future

Insure Our Future holds the insurance industry accountable for its role supporting the drivers of climate change. The campaign is calling on insurers to stop insuring and investing in coal and tar sands projects and…

Seeking Higher Ground: How to Break the Cycle of Repeated Flooding with Climate-Smart Flood Insurance Reforms

The National Flood Insurance Program (NFIP) was designed to help Americans recover from flood disasters, but it can also unintentionally trap homeowners who would prefer to move somewhere safer. Instead of moving, many policyholders find…


‘This is not a survivable market.’ Insurance crisis hits Fla.

By Thomas Frank   06/22/22  
FedNat’s pullback is the latest in a stunning series of insurance cancellations, nonrenewals and company liquidations that have left Florida residents struggling to find coverage at the start of a hurricane season that is projected…

This Year’s Hurricane Season Threatens One Of The U.S.’s Biggest Economies

By Alejandro De La Garza   06/02/22  
As the June 1 start of hurricane season approached last week, Florida lawmakers raced to address a crucial gap in the state’s coastal defenses: property insurance. Insurance markets in the state are in crisis, with…

Tomorrow is not the same as yesterday

Dr. Lou Gritzo, vice president and manager of research at FM Global, joins StrategicRISK to talk about the changing climate and how businesses can make resilient choices. Lou, thanks for joining us to discuss climate…

Long Island flood insurance premiums will rise for most homeowners but some will see big price cuts

By Jonathan LaMantia   11/05/21  
Three in four Long Island homeowners insured under the National Flood Insurance Program will see their premiums rise next year, while a smaller contingent will see their annual bill cut by $1,200 or more.

What could finally stop new coal plants? Pulling the plug on their insurance.

By Steven Mufson   10/26/21  
The campaign to stop the proliferation of coal plants may come down to a bit of financial engineering: pulling the plug on insurance coverage. More than 30 insurance companies have announced restrictions on underwriting coal…

What the US climate-risk review means for FHA, VA loans and more

By Daniel Houston   10/19/21  
A federal effort to make private flood insurance available to FHA borrowers in flood zones is nearing final approval, according to the White House’s latest climate-risk report.

Should You Get Flood Insurance for Your Home?

By Ronda Kaysen   10/08/21  
In the weeks since Hurricane Ida flooded her Maplewood, N.J., basement with eight inches of water, Ingrid Nagy has been trying to figure out how to financially protect herself from the next big storm.

Investigation: Majority of Directors of World’s Top Insurance Companies Tied to Polluting Industries

By Rachel Sherrington   10/07/21  
Just over half of all directors at 30 of the world’s largest insurance companies have affiliations to polluting companies and organisations, reveals an investigation by DeSmog, including several individuals holding senior roles at some of…

The price of living near the shore is already high. It’s about to go through the roof.

By Darryl Fears and Lori Rozsa   10/01/21  
As FEMA prepares to remove subsidies from its flood insurance, a new assessment says 8 million homeowners in landlocked states are at risk of serious flooding because of climate change

Climate Change Replaces Pandemic as Insurers’ Biggest Worry

By Alexandre Rajbhandari   09/28/21  
Climate change has returned to the top of the list of insurers’ biggest concerns as the vaccine roll-out and gradual lifting of health restrictions see pandemic fears ease in many countries.

Coal, oil sands companies feel growing insurance squeeze

By Corbin Hiar   09/20/21  
Insurance, a basic necessity for any business, is becoming increasingly expensive for some coal and oil sands companies.That’s because a growing number of insurers are refusing to underwrite companies involved with producing or transporting the…

With Extreme Weather, Home Insurance Will Cost More. If You Can Get It.

By Paul Sullivan   09/10/21  
Wildfires in California and Oregon. Hurricanes that wreak havoc from the Gulf Coast up to the Northeast. Hail in the Midwest that is so big and falls with such intensity that it punctures roofs.

Climate Change Risks And Insurance Policies

NPR's Michel Martin speaks with economist Howard Kunreuther, co-director of the Wharton Risk Management and Decision Process Center, about climate change's impact on the insurance industry.

IPCC Findings Illustrate Need for Banks and Insurers to Divest From Fossil Fuels

By Hannah Saggau   09/01/21  
Recently, the Intergovernmental Panel on Climate Change (IPCC) released its latest report, identifying a rapidly closing window to avoid the direst impacts of the climate emergency. The report set off renewed calls to stop the…

Climate risks for insurers: Why the industry needs to act now to address climate risk on both sides of the balance sheet

By Hailey Ross   08/27/21  
Financial regulators worldwide are grappling with the impact of climate change and the increasing risk it presents for financial systems, while climate scientists call for rapid reductions in greenhouse gas emissions to prevent a climate…

FEMA overhauls the National Flood Insurance Program for climate change

By Diana Olick   08/18/21  
Climate change and its devastating impact are accelerating faster than ever, according to a new report from the United Nations’ Intergovernmental Panel on Climate Change. Hurricanes are becoming stronger, rainfall heavier and flood risk higher.…

FEMA Will Take Climate Change Into Account In Flood Insurance Overhaul

By Natasha Lasky   08/17/21  
Currently, the Federal Emergency Management Agency (FEMA) provides $1.3 trillion in coverage for more than 5 million policyholders in 23,500 communities nationwide through the National Flood Insurance Program. But on October 1, the program will be overhauled to…

FEMA Knows a Lot About Climate-Driven Flooding

By James Bruggers   08/04/21  
The Federal Emergency Management Agency (FEMA) has been collecting a lot of information about flood risks across America, including the increased risk of flooding linked to climate change. But the agency has not effectively used…

Smaller but More Frequent Catastrophes Loom Over Insurance Sector

By Julie Steinberg   07/22/21  
Floods in Germany, ice storms in Texas and heat domes in the Pacific Northwest are focusing attention in the insurance industry on the cumulative damage wrought by clusters of second-tier catastrophes.

Fannie and Freddie Mortgages Vastly Underestimate Flooding Risks

Climate-induced flooding has inundated coastal cities, yet new reporting from Politico shows that government mortgage lenders like Fannie Mae and Freddie Mac continue to pump money into severely flood-prone property markets. 

FEMA Is Changing Its Flood Insurance Program. Here’s How It Will Impact Texans

By Katie Watkins   06/24/21  
Roughly 86% of Texans with federal flood insurance could see their premiums go up next year when a new program goes into effect, according to data from the Federal Emergency Management Agency. FEMA's National Flood…

With Start of Hurricane Season, It’s Time to Consider Flood Insurance

By Ann Carrns   06/11/21  
This year’s hurricane season began early, with a named storm forming before the official start on June 1, and it is expected to be active. If you lack flood insurance, especially if you live near…

Poor Homeowners Will Pay Less after Flood Insurance Overhaul

By Thomas Frank   06/07/21  
An upcoming overhaul of the federal government’s flood insurance program will financially benefit many of the nation’s lowest-income communities by cutting premiums for a large share of their residents, an E&E News analysis of government…

US Insurance Giants Worsening Climate Crisis, Biodiversity Loss, and Human Rights Violations: Report

By Kenny Stancil and staff writer   05/26/21  
The world's leading insurance companies, especially U.S. ones, are underwriting and investing in industries that drive planetary heating, destroy ecosystems, and violate human rights, according to Insuring Disaster, a new report released Wednesday by a United Kingdom-based financial…

Point of View: Home insurance rates soaring with the heat

By Carlos Gimenez   05/25/21  
Homeowners are the ones who incur the hefty costs when extreme weather strikes, especially those who live in low-lying coastal areas. Now is the time for all levels of government, in conjunction with the innovations…

RMS Global Catastrophe Model Leader Launches First Climate Change Models, Enabling New Risk Insights

By Newswire   05/06/21  
New Climate Change Models Show Impact of Climate Change on Losses; Losses from Hurricanes Could Increase by 24 percent by 2050 Newark, Calif., May 5, 2021 – RMS, the world’s leading catastrophe risk modeling and solutions company,…

Climate Change Could Cut World Economy by $23 Trillion in 2050, Insurance Giant Warns

By Christopher Flavelle   04/23/21  
Poor nations would be particularly hard hit, but few would escape, Swiss Re said. The findings could influence how the industry prices insurance and invests its mammoth portfolios.

Climate crisis demands a new insurance industry

By Preston Nanney, CPCU   04/19/21  
As debate continues over declined COVID-19 business interruption claims and the virus exclusion, the role of the insurance industry amid global disasters has come into question. The ubiquity of pandemic risk requires enormous, sometimes unaffordable premium…

Insurers Struggle to Forecast Near-Term Risks in a Shifting Climate

By Stephanie Pappas   04/16/21  
The 2020 wildfire and hurricane seasons broke records, with wildfires burning more than 10 million acres in the U.S. and 30 named storms roaring through the Atlantic Ocean.

Flood Risks Are Rising Amid Climate Change, But Congress Is Delaying Action

By Leanna First-Arai   03/31/21  
The Biden administration is adding a $2 trillion green jobs and infrastructure plan to the list of climate commitments announced in its first 100 days, but pinpointing who will foot the bill for damage caused by rising seas and…

Why Is Chuck Schumer Protecting the Rich From Flood Insurance Hikes?

By Nick Martin   03/26/21  
As last week was winding to a close, The New York Times reported on an odd instance of power brokering by Senate Majority Leader Chuck Schumer. Ahead of a planned April 1 rollout, the New York senator stepped…

FEMA pauses flood insurance rate update after Schumer pushback: report

By Rachel Frazin   03/18/21  
The Federal Emergency Management Agency (FEMA) has paused an impending update to flood insurance rates, aimed at making the country more prepared for risks of climate change, after objections from Senate Majority Leader Charles Schumer (D-N.Y.), The New…

Chuck Schumer Stalls Climate Overhaul of Flood Insurance Program

By Christopher Flavelle and Emily Cochrane   03/18/21  
The Senate leader is objecting to a plan that would raise costs for some of his constituents by bringing flood insurance rates in line with climate risks. WASHINGTON — One of the federal government’s main…

The Future of Climate Change Risk Regulation for Insurers in America?

By Thomas M. Dawson   03/12/21  
In the few short weeks since our last report on climate change and the US insurance industry, the volume of climate change news has been extraordinarily high. The range of developments has been broad to say the…

Flood risk is growing for US homeowners due to climate change. Current insurance rates greatly underestimate the threat, a new report finds

By Drew Kann   02/22/21  
Wildfires and hurricane-force winds produce stunning videos and headlines, but flooding is the most common and costly natural disaster in the United States.

Insurance Industry Pulling Plug on Fossil Fuels

By Peter Sinclair   02/01/21  
Nothing happens in the Economy without insurance. Could the insurance industry be a driver of climate action? More on this in upcoming Yale Climate Connections vid, stay tuned.

Homeowners And Insurance Companies Will Grapple With Climate Change In 2021

By Ed Leefeldt and Amy Danise   01/13/21  
After a 2020 filled with hurricanes and wildfires, this year could be the moment when the U.S. insurance industry finally grapples with climate change. Who will win that wrestling match? Insurers? Homeowners? Or the increasingly…

Andy Hoffman: Insurance Industry as Change Agent on Climate

By Peter Sinclair   10/06/20  
More from University of Michigan Ross School of Business professor Andy Hoffman – this time on the insurance industry’s response to climate change, and industry’s role as change agent.

Insurance for when FEMA fails

By Zak Coleman   07/16/20  
The towns and cities dotting the Mississippi River have been a commercial spine of the American heartland for years, and for just as long have had to reckon with the sometimes violent ups and downs…

Millions of Homeowners Who Need Flood Insurance Don’t Know It — Thanks to FEMA

By Lisa Song and Tony Briscoe   06/30/20  
When Michael Wilson was in the process of buying a brick bungalow on Chicago’s South Side in October 2018, he thought he had been diligent in researching the flood risk.

Borrowed time: Climate change threatens U.S. mortgage market

By Zack Colman   06/08/20  
“Where catastrophe happens and physical climate really manifests itself, the public tab will end up carrying this,” said Ivan Frishberg, vice president for sustainability banking with Amalgamated Bank. “Everyone is exposed in this. I’ve had…

The insurance industry needs to end its investments in fossil fuel companies

By Arthur Helmus   05/21/20  
But sadly, insurers are tongue-tied. I should know: I spent much of my career in the insurance industry and had the opportunity to sit on climate change committees within two of the largest property and…

Climate change and soaring flood insurance premiums could trigger another mortgage crisis

By Jie Jenny Zou   02/25/20  
Flood insurance is sold as protection from climate change. As costs rise, it could push people from their homes instead.

Boulder County Wants Insurance Companies To Ditch Their Fossil Fuel Investments

By Grace Hood   02/14/20  
Boulder County Commissioners have made the decision to start to move away from insurance companies that invest in oil, gas, coal and other fossil fuels — becoming the first county in the U.S. to do…

California Bans Insurers From Dropping Policies Made Riskier by Climate Change

By Christopher Flavelle and Brad Plumer   12/05/19  
California’s wildfires have grown so costly and damaging that insurance companies — a homeowner’s last hope when disaster strikes — have increasingly been canceling people’s policies in fire-prone parts of the state.

FEMA bought 40,000 flood-prone homes. They may have to buy millions more.

By Eric Roston   10/11/19  
As the climate crisis worsens, more Americans will be forced from their homes. Many won’t be able to afford it, and the U.S. isn’t prepared for a massive, government-subsidized migration away from flood-prone areas, according…

Millions Could Lose Insurance in Flood, Fire Areas

Insurance Journal: By the time David Kaisel got back from selling his flour at a farmers’ market, a wildfire in California’s Capay Valley had burnt both his tractor and the shipping container where he kept…

Money Is the Oxygen on Which the Fire of Global Warming Burns

By Bill McKibben   09/17/19  
What if the banking, asset-management, and insurance industries moved away from fossil fuels?

The Climate Crisis Is Poised to Make Huge Swaths of America Totally Uninsurable

By Thor Benson   09/15/19  
“People are going to be trapped because once it’s uninsurable, good luck selling the house,” one climate expert cautioned.

Climate change poses major risk to flood insurance program, experts warn

By James Jarvis   09/12/19  
Environmental experts on Wednesday warned House lawmakers about risks to the National Flood Insurance Program (NFIP) posed by climate change, saying the situation is likely to worsen in the coming years.