Climate change and insurance in the United States

The effects of climate change on extreme weather events is requiring the insurance industry in the United States to recalculate risk assessments for various lines of insurance. From 1980 to 2005, private and federal government insurers in the United States paid $320 billion in constant 2005 dollars in claims due to weather-related losses while the total amount paid in claims annually generally increased, and 88% of all property insurance losses in the United States from 1980 to 2005 were weather-related. Annual insured natural catastrophe losses in the United States grew 10-fold in inflation-adjusted terms from $49 billion in total from 1959 to 1988 to $98 billion in total from 1989 to 1998, while the ratio of premium revenue to natural catastrophe losses fell six-fold from 1971 to 1999 and natural catastrophe losses were the primary factor in 10% of the approximately 700 U.S. insurance company insolvencies from 1969 to 1999 and possibly a contributing factor in 53%.

From 2005 to 2021, annual insured natural catastrophe losses continued to rise in inflation-adjusted terms with average annual losses increasing by 700% in constant 2021 dollars from 1985 to 2021. In 2005, Ceres released a white paper that found that catastrophic weather-related insurance losses in the United States rose 10 times faster than premiums in inflation-adjusted terms from 1971 to 2004, and projected that climate change would likely cause higher premiums and deductibles and impact the affordability and availability of property insurance, crop insurance, health insurance, life insurance, business interruption insurance, and liability insurance in the United States. From 2013 to 2023, U.S. insurance companies paid $655.7 billion in natural disaster claims with the $295.8 billion paid from 2020 to 2022 setting a record for a three-year period, and after only the Philippines, the United States lost the largest share of its gross domestic product in 2022 of any country due to natural disasters while having the greatest annual economic loss in absolute terms.

In September 2024, Verisk Analytics released an annually issued report that noted that while interannual changes in global insured natural catastrophe losses owes mostly to increased exposure (i.e. growth in the number of insurance policies sold), inflation, and climate variability rather than climate change, the report also summarized company projections that estimated that climate change increases the global average annual insured loss 1% year-over-year (in comparison to 7% that year for exposure growth and inflation), and that the impact of climate change on interannual changes could become comparable to that of climate variability by 2050 due to the former following a compound growth rate.