Climate threats put cities at financial risk

As climate-driven disasters intensify, cities face a cycle where infrastructure, insurance and financial challenges compound, potentially triggering economic crises across urban America.

Saul Elbein reports for The Hill.

In short:

• Increasingly severe climate events, like hurricanes and wildfires, are driving insurance companies to raise rates or withdraw coverage, destabilizing city finances.
• Without affordable insurance, homeowners and businesses face foreclosure and asset devaluation, reducing local tax revenues and undermining critical municipal services.
• Smaller and mid-sized cities, especially those with outdated infrastructure, are particularly vulnerable to “death spirals” as climate impacts erode their resilience and financing options.

Key quote:

“Climate risk makes things uninsurable. No insurance makes things un-mortgageable. No mortgages crashes the property markets.”

— Sen. Sheldon Whitehouse (D-R.I.)

Why this matters:

As insurance companies withdraw from high-risk areas, U.S. cities may see cascading financial failures that undercut their resilience against disasters. Without systemic policy changes and investment, cities risk entering a cycle of economic decline, leaving behind vulnerable residents unable to relocate or recover.