Climate-fueled insurance crisis threatens U.S. housing and financial stability
A surge in climate-driven disasters, skyrocketing insurance rates and a lack of affordable housing are creating a cascading crisis that experts warn could destabilize the U.S. economy.
Lisa Sorg reports for Inside Climate News.
In short:
- Home insurance rates are rising faster than inflation, driven by an increase in climate-related disasters, leaving many homeowners struggling to keep up.
- Financial experts warn of a "death spiral," where unaffordable insurance leads to mortgage delinquencies, housing shortages, and broader economic strain.
- Recent cuts to federal resilience programs under the Trump administration could worsen the crisis by limiting communities' ability to mitigate future disasters.
Key quote:
"In some ways, it’s just the beginning of a death spiral for some regions of our country."
— Anne Perrault, senior policy counsel, Climate Program at Public Citizen
Why this matters:
Rising insurance premiums not only threaten individual homeowners but also ripple across the entire housing market, affecting buyers, developers and financial institutions. When insurers withdraw from high-risk areas or raise rates beyond affordability, families are left vulnerable, often turning to unreliable insurers or forgoing coverage altogether. This lack of protection can lead to deeper financial distress, especially when natural disasters strike. At the same time, federal and state disaster recovery funds are increasingly stretched thin, unable to meet the growing demand for rebuilding and repair. Cuts to key resilience programs further exacerbate the situation, reducing communities' ability to prepare for and recover from future events.
Learn more: Insurance woes increase as climate change impacts profitability
