Insurance is the climate crisis canary in the coal mine, and the canary is expiring. Last year, insurers globally had a record $154 billion in natural catastrophe losses. In the U.S., insured natural catastrophe losses were a record $117 billion; 2025 is on track to be another record setting year, with the LA wildfires alone costing insurers an estimated $25 to $35 billion.
In response to these losses, property and casualty insurers are raising prices substantially across the country and declining to write or renew insurance in at least 18 states. Another indicator of the magnitude of the insurance crisis is the increase in the number of homeowners having to purchase insurance from state-created insurers of last resort known as “residual markets” or FAIR plans – over three million policyholders and rising.
A recent study by Insure Our Future concluded that over a third of global insured losses are driven by climate change. While insurers argue that the increase in homes and businesses in harm’s way and the increase in the cost to replace homes and businesses are also contributors to insurance losses, these two factors wouldn’t matter as much if it were not for the increased frequency and severity of climate-driven disasters damaging or destroying homes and businesses.
Insurers’ argument that deregulation and price increases will make insurance available and affordable again is belied by the evidence. Insurers are declining to renew or write new insurance policies both in states with and without rate regulation, where insurers are free to raise rates without prior approval. One has only to look at Florida, where rates are three to four times the national average and which has embraced the insurers’ deregulation demands, to see that this approach is not sufficient to overcome the increased risk and losses from hurricanes and other natural catastrophes driven by climate change. Last year, Farmers announced it would no longer write any new or renew any auto, home, or umbrella insurance in Florida, joining all the other national carriers who have concluded they can’t write insurance in Florida despite deregulation and high rates.
Given that it is fossil fuel industry emissions that are a major driver of the climate change that is causing the losses, which, in turn, is causing insurers to stop writing insurance, how can U.S. insurers continue to justify investing over half a trillion dollars in the fossil fuel industry? It also makes no sense for insurers to continue insuring the very industry whose emissions are posing an existential threat to the writing of insurance.
And, why aren’t insurers and FAIR Plans bringing subrogation claims against the major oil and gas companies to recover from them for their emissions’ contribution to the insurers’ losses? Insurers collected $11 billion from Pacific Gas and Electric (PG&E) because it ignited the Camp Fire, which cost insurers over $12 billion. Insurers’ investments in the major oil and gas companies are not a defensible basis for declining to bring subrogation claims against the oil and gas industry – their investment in electric utilities certainly did not stop them from suing PG&E.
Insurers need to support the transition to net zero emissions if we are to avoid an uninsurable future. Insurers should adopt and implement commitments to transition over reasonably short periods of time from investing in and writing insurance for the fossil fuel industry. We need insurers to analyze and disclose their financed and underwritten emissions, as well as the risks they face from climate change, so they and their investors can decide how best to address those risks.
Dave Jones
Director, Climate Risk Initiative, Center for Law, Energy & the Environment, UC Berkeley School of Law