Insurance industry undergoes transformation due to escalating climate change impacts
In the face of a changing climate, the home insurance crisis is escalating across the United States, with Florida and potentially Colorado being major hotspots.
Florida: A Severe Home Insurance Crisis
The home insurance crisis in Florida remains severe in 2025, primarily driven by climate change-related extreme weather events, especially hurricanes. The high economic losses have forced many insurance companies to raise rates or exit the market, leading to high insurance premiums—with costs projected around $15,460 annually, nearly five times the national average—and significant insurance non-renewals.
Despite recent legislative reforms aimed at stabilizing the market, many Floridians still face unaffordable insurance or difficulty obtaining coverage due to climate risk. The reduction of state reinsurance funds may increase costs passed on to homeowners if private reinsurance prices are higher. Industry debates remain about the relative role of climate change versus issues like fraud in non-renewals, but the trend of climate-driven risk is widely recognized by experts and lawmakers.
Experts advocate for a mitigation-first approach—strengthening homes through retrofits, mandatory inspections, and elevation to reduce disaster losses, which will, in turn, help lower insurance claims and premiums long-term.
Colorado: A Preliminary Look
Regarding Colorado, the available data primarily focuses on Florida's extreme challenges. Colorado experiences different climate risks such as wildfires and flooding, but without current sourced details, a definitive status of a similar home insurance crisis in Colorado cannot be stated with confidence.
The article also features an interview with Benjamin Keys about the future of home ownership in a world affected by climate change. The interview does not discuss any new insights about the impact of climate change on the real estate market.
The article is part of The State of Science series, featuring interviews with Flora Lichtman, Jessica Meszaros, Rachel Cohen, and Murphy Woodhouse, discussing the home insurance crisis in Florida and Colorado, as well as the impact of climate change on the real estate market. The series also covers the occurrence of 100-year floods and their increased frequency due to climate change, and the use of a probability-based approach to estimating flood risk. The reporters have been covering the issue of home insurance difficulties in different regions.
- As Florida grapples with a severe home insurance crisis, environmental scientists are urging investments in retrofitting homes to mitigate climate change-induced damages, as this could potentially lower insurance premiums and claims over the long term.
- In the realm of investing, some financial analysts are exploring opportunities in the real estate sector of climate-vulnerable regions, considering the potential for increased insurance premiums and non-renewals due to climate change-related risks, such as those currently facing Florida.
- With Colorado navigating its own climate risks like wildfires and flooding, environmental scientists and financiers alike are placing growing importance on understanding the environmental, economic, and financial implications of climate change on other regions, like Colorado, to better prepare for future challenges and adjust accordingly.
