The United States is facing a climate-related insurance crisis, which is beginning to create instability in many housing markets.[1] National insurance underwriting losses have risen dramatically, reaching a 10-year high of $38 billion in 2023, primarily due to climate-related factors including more frequent and intense weather related natural disasters and storms, reinsurance price increases, and related inflation.[2] To stay profitable in the face of increasing catastrophe losses, insurers have increased premiums nationwide and are excluding coverage in high climate-risk jurisdictions,[3] leading to lack of insurance coverage in significant areas across the nation.

Travelers, one of California's largest home insurers, is no exception: its catastrophe losses increased from $1.85 billion in 2021 to $2.99 billion in 2023.[4] In response, Travelers requested approval this year to increase California rates by an average of 15% and dropped policies in risky markets.[5] Yet, despite ever-growing climate-related losses, Travelers continues to invest in and underwrite high carbon emitting companies, accelerating climate impact. Travelers’ current fossil fuel investments have reached $1.906 billion.[6]

Increasing insurance rates and reduced insurance coverage in high-risk markets transfers the financial burden of climate change to policyholders, investors, and taxpayers.[7] With nationwide insurance premiums increasing 34% between 2017 and 2023[8] — a rate 40% higher than inflation[9] — the number of Americans unable to afford insurance is increasing. These 6.1 million uninsured households represent $1.6 trillion in property value at risk.[10]

As Travelers’ cancellations grow and climate-related rate increases outprice its customer base, it is unclear how Travelers will successfully maintain its homeowner business line, which makes up 50% of its personal insurance business.[11]

In Traveler’s TCFD climate risk discussion, Travelers notes it can reduce growing climate risk by annually adjusting its pricing and policy conditions — that is, by raising rates and reducing coverage.[12] However, Travelers fails to explain if or how it can retain sufficient homeowners’ policies to remain profitable as it makes these adjustments. Already, state-run residual plans are absorbing $1 trillion in risk and policies that would previously have been covered by private insurers.[13]