The price of homeowner insurance has skyrocketed in the past five years, but the hikes have been even more steep for Americans living in high-risk natural disaster areas, according to a new federal analysis of insurance data.
Between 2018 and 2022, Americans living in areas prone to flooding, wildfires or hurricanes paid an average of $2,321 for their insurance premiums while homeowners that insurance companies deemed to live in safer parts of the country have paid an average of $1,277. Those figures come from a U.S. Department of Treasury report that examined 246 million homeowner policies issued by 330 insurance companies during a five-year period.
The 66-page report breaks down how insurance rates have grown in different regions and concludes that "homeowners in communities affected by substantial weather events are paying far more than those elsewhere."
"This report identifies alarming trends of rising costs of insurance — to consumers and insurers themselves — as well as lack of availability of insurance, all of which threaten the long-term prosperity of American families,” Treasury Secretary Janet Yellen said in a statement.
The report defined high-risk areas as the East Coast shoreline, the Gulf of Mexico and the West Coast along the Pacific Ocean. Homeowners in those zones have also seen insurance companies not renew their policies at a higher clip than the rest of the nation, the report found.
The data adds to other measures showing insurance policies are becoming more expensive. Rates grew 9.7 percent during the first nine months of 2024, according to the most recent data available from S&P Global Market Intelligence. Those costs grew an average of 11.3% nationwide in 2023, according to S&P.
In most locales, a rise in rates must first be approved by a state's insurance regulatory department.
Risky areas
For their part, insurance companies have said major climate-related weather events in recent history — including the 2018 Camp Fire in California, the 2021 Hurricane Ida in Louisiana, and the 2022 Hurricane Ian in Florida — have made insuring residents in those areas more risky and costly, forcing them to raise rates or discontinue accepting new customers. Some of the nation's largest insurance providers — including Allstate, Nationwide and State Farm — have stopped writing policies in parts of California and Florida.
In 2021, the Biden administration ordered the Treasury Department to study how climate change is impacting the insurance industry. The report, released Thursday, marks the end of Biden's mandate.
The Treasury report also landed a week after a collection of consumer advocacy groups — including Public Citizen and Americans for Financial Reform — pushed the agency to release its findings.
“This report and dataset provides hard evidence for a trend that homeowners are already experiencing: climate change is making it harder for people to find affordable insurance, if they can find it at all,” Kelsey Condon, policy counsel for climate finance at Americans for Financial Reform Education Fund, said in a statement Friday.
Carly Fabian, a senior insurance policy advocate for Public Citizen, said in a statement that "climate change is creating an insurance crisis for households across the country."
"For many Americans, home ownership is a key part of the American Dream, and climate change is now pushing that dream out of reach," Fabian said. "While insurance companies will no doubt find ways to profit from the crisis, households across the country cannot sustain rising costs indefinitely.”