Washington, D.C. — In 2024 alone, the United States sustained 27 different billion-dollar weather and climate disasters, totaling $183 billion in damage. Earlier this year, disaster struck the Los Angeles area with weekslong wildfires, taking the lives of 29 people; burning more than 58,000 acres of land; and destroying 16,000 homes, businesses, and other structures.
A new Center for American Progress report sounds the alarm on how policymakers need to address availability and affordability challenges so that households and communities are financially protected as insurers pull back services in the face of more frequent and severe disasters. Some of the key issues discussed in the report include how:
- Rising insurance costs and reduced availability are market signals of increased physical risks from climate disasters.
- Insurers, unable to adequately diversify large, correlated climate risks, are reducing coverage.
- Declining insurance coverage has profound personal and economic effects.
- Governments have taken steps to spread risk and costs when diversification fails and private insurance coverage diminishes.
To help policymakers prepare for the future, this report also offers policy solutions and a framework for developing further actions to reduce the risk of loss and to protect communities from climate disaster. Solutions discussed include investing in climate resilience; providing better public climate-related risk data and analysis to guide households, insurers, and government actors; and addressing gaps in climate-related risk supervision of insurers to enable a strong financial system.
“As losses from climate disasters grow, insurers will continue to retreat from whole markets and raise prices to prohibitively high levels, leaving households and economies financially vulnerable. Inaction by the Trump administration could put whole communities at risk,” said Lilith Fellowes-Granda, associate director of financial regulation and co-author of the report. “Policymakers need to step up to push forward legislation and regulations that deliver comprehensive solutions so that the insurance families rely on when disaster strikes is not out of reach.”
Read the report: “Managing the Climate Change-Fueled Property Insurance Crisis” by Lilith Fellowes-Granda, Marc Jarsulic, and Alexandra Thornton
For more information or to speak with an expert, please contact Sarah Nadeau at [email protected].