Paying a High Premium: How Climate Change Is Crippling Homeowner’s Insurance and Fueling a Housing Crisis
This paper examines the growing impacts of climate change in the US homeowner’s insurance industry. As climate change–driven weather extremes and natural disasters have accelerated in their frequency and severity, they have inflicted increasingly more residential property damage and destruction, leading to surging losses and claims payouts for the US homeowner’s insurance industry. Faced with worsening underwriting performance, the US home insurers have responded with higher homeowner’s insurance premiums, reduced home insurance coverage, policy non-renewals, exits from high-risk geographic areas, and other changes to their business practices. Such climate-driven actions by home insurers have led to a crisis of homeowner’s insurance affordability, availability, and protection. This crisis further undermines homeownership affordability, eroding homeowner finances, and threatening the stability of the US financial system. By focusing on the US homeowner’s insurance industry, this paper provides a case study on the growing economic costs and impacts of climate change.