To reckon with climate change, insurance regulators must protect options for consumers
Photo via the Associated Press.

Sean Shaw - AP
'Climate change isn’t going away. While some lawmakers are serious about tackling it, they won’t be able to turn back the clock any time soon on the dangerous conditions that destroy more homes and lives every year.'

When Farmers Insurance announced earlier this year that it would no longer offer home insurance policies in Florida, the company joined a long list of insurers who refuse to do business in the Sunshine State.

For consumers, it is just the latest chapter in a crisis that has been unfolding for years: the dangerous conditions caused by climate change have become so threatening that insurers are no longer willing to shield residents from its financial risks.

Given the steady departure of insurers from the state, the move was hardly a surprise, but it would be hard to blame the 100,000 affected homeowners for feeling like they had the rug pulled out from underneath them. As a result of business decisions driven by climate risk, many homeowners lost the last measure of financial security and protection from persistent flooding and other climate-driven disasters.

Unfortunately, the climate crisis isn’t limited to Florida. Insurers have also left Louisiana at an alarming rate in recent years. State Farm recently announced it would no longer offer home insurance policies in California, where regulators even had to temporarily ban insurers from dropping policies in wildfire areas. In 2023, historic hurricanes made landfall on both coasts.

Make no mistake: insurers will either continue to raise prices or stop doing business in Florida — and other markets across the country — as the effects of climate change become more intense.

Since it’s impossible to uproot millions of residents and unrealistic to expect that the climate crisis will be solved overnight, it’s time for policymakers to get creative about protecting Americans from the risks that come with climate change while they work urgently to tackle both its causes and effects.

They should start by embracing options that allow residents and homeowners to get the protection they desperately need at a price they can afford.

Insurers like State Farm and Farmers are leaving these markets because the economics are unsustainable for them. At the same time, these insurers are urging regulators to keep other viable options out of the market, particularly those supported by private capital.

Unlike the insurance giants, those companies are more nimble and can step in quickly to stabilize markets where the big insurers either choose not to do business or charge exorbitant rates. They are also structured to supply higher-yielding investments that are well-positioned to fulfill promises to policyholders.

Private capital stepped in to help stabilize property and casualty markets after Hurricane Andrew, and severe weather events have only increased in frequency and severity dramatically since then. The property insurance market in places affected by climate change is a prime opportunity for new solutions that give consumers the protection they need but can’t otherwise find as insurers choose profits over people.

In September, Democratic U.S. Sens. Elizabeth Warren of Massachusetts, Sheldon Whitehouse of Rhode Island and others called upon the U.S. Treasury Department and the agency’s Financial Insurance Office (FIO) to address the threat the climate crisis poses to consumers as well as the overall stability of the economy. Warren noted that the Treasury Department has been unresponsive to these pleas for years.

At the same time, Treasury officials and the FIO have advanced punitive regulations specifically on insurers backed by private capital. Warren’s Senate colleagues have done the same.

Senate Banking Committee Chairman Sherrod Brown has urged the Joe Biden administration and other insurance regulators to take steps to protect big insurers from their competitors at a time when consumers need as many options as possible to protect themselves against a rising number of wildfires, hurricanes, and other catastrophic events.

Any new market entrant should be subject to the same rules as existing market participants, and those rules should be robust in protecting consumers. Both are true in insurance regulation.

Making matters worse for officials and regulators who are bending the regulatory environment to target certain companies for the benefit of major insurers, these efforts cause disproportionate damage to communities of color. Thanks to the racial wealth gap, minority communities are frequently located in areas that face the greatest danger from volatile weather events. These communities are in the greatest need of access to affordable insurance options but are harmed by political maneuvering that keeps insurers out of the market.

Climate change isn’t going away. While some lawmakers are serious about tackling it, they won’t be able to turn back the clock any time soon on the dangerous conditions that destroy more homes and lives every year. The best and fastest way to support people who are living with the harm from climate change is to make options available to consumers who need someone to do the job that other insurers can’t — or won’t — do.


Sean Shaw is the founder of People Over Profits and a former Florida Insurance Consumer Advocate, a state-appointed independent watchdog position that protects consumers from price gouging and insurance fraud.

Guest Author


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