Insurance: The Economic Fault Line

Climate-driven losses are forcing insurers to raise premiums, increase deductibles, or exit markets entirely.

Flood & Homeowners Insurance

Flood insurance is becoming unaffordable or unavailable in many regions, undermining mortgage availability and property liquidity.

Systemic Risk

The insurance collapse represents a broader capital crisis, transferring climate risk directly onto homeowners and taxpayers.

Climate Change and Insurance: Costs, Availability, and Sustainability

Insurance costs across sectors -- including crop insurance, property insurance, real estate policies, and transportation coverage -- are projected to rise annually as risk assessments become more climate-focused. In agriculture, extreme weather events such as droughts and floods are already inflating premiums for crop insurance, threatening the viability of farms. Similarly, transportation insurers face rising costs due to infrastructure damage from climate-related disasters, such as washed-out roads and disrupted supply chains.

To address these challenges, systemic reforms are necessary. This includes redesigning insurance models to incorporate climate resilience, investing in mitigation measures like improved infrastructure and flood defenses, and implementing policies that discourage development in high-risk zones. Without such changes, the cycle of rising costs and escalating risks will continue to burden individuals, businesses, and governments.

Climate change is profoundly impacting homeowners' and flood insurance costs and availability in several ways:

1. Increased Frequency and Severity of Natural Disasters: Climate change is leading to more frequent and severe weather events such as hurricanes, floods, wildfires, and storms. These events result in higher insurance payouts due to increased property damage, leading insurance companies to raise premiums to cover their costs.
2. Rising Sea Levels: As sea levels rise due to climate change, coastal areas become more prone to flooding and storm surges. This increased risk of flood damage prompts insurance companies to adjust their pricing models, often resulting in higher premiums for properties in flood-prone zones.
3. Changing Risk Assessment: Insurers are reassessing risk models to account for the changing climate conditions. Areas once considered low-risk may now be reclassified as high-risk due to increased vulnerability to weather-related events. As a result, homeowners in these areas may face higher insurance premiums or even difficulty obtaining coverage.
4. Reduced Availability of Coverage: In regions heavily impacted by climate change-induced disasters, insurance companies may reduce or withdraw coverage altogether. This can leave homeowners in high-risk areas struggling to find affordable insurance options, particularly for flood insurance.
5. Government Intervention: Government-backed flood insurance programs, such as the National Flood Insurance Program (NFIP) in the United States, face financial strain due to increased claims resulting from climate-related disasters. This may lead to reforms in insurance programs, such as adjustments to premium rates or eligibility criteria, impacting homeowners' access to affordable coverage.

Overall, climate change is exacerbating the risks and costs associated with homeowners' and flood insurance, posing significant challenges for individuals and communities vulnerable to its effects.

Resources

• The Collapse Point: How Climate Change Is Breaking Insurance -- and Capitalism With It
• Climate Collapse Will Break Capitalism
• Florida at the Front Line: Accelerating Sea-Level Rise Is Reshaping the State
• 2025 a Record Year of Climate Chaos Costs (And It's Only July)
• Collapse of Insurance: California as a Case Study
• Climate-Fueled Insurance and Tax Hikes Are Driving Mortgage Delinquencies
• Florida's Real Estate Collapse: Climate Physics and the End of Coastal Wealth
• Climate Change, Doubling Time, and the Eroding Value of Jersey Shore Real Estate
• The Cost of Climate Change: Rising Homeowners Insurance Rates
• Climate Change and Insurance: The Los Angeles Wildfires
• The Insurance Crisis the FAIR Plan a System Under Strain
• Climate Change's Impact on Florida Insurance
• Homeowners Insurance Coverage $1 Trillion Hole
• Flood Insurance

* Our probabilistic, ensemble-based climate model -- which incorporates complex socio-economic and ecological feedback loops within a dynamic, nonlinear system -- projects that global temperatures are becoming unsustainable this century. This far exceeds earlier estimates of a 4°C rise over the next thousand years, highlighting a dramatic acceleration in global warming. We are now entering a phase of compound, cascading collapse, where climate, ecological, and societal systems destabilize through interlinked, self-reinforcing feedback loops.

What Can I Do?
The single most important action you can take to help address the climate crisis is simple: stop burning fossil fuels.