As the world faces the escalating impacts of climate change, the insurance industry finds itself in a state of upheaval. Traditionally, states like Florida and California have been at the forefront of disaster-related losses. However, the ripple effects are now being felt in regions once considered less vulnerable, such as Iowa, Arkansas, Ohio, Utah, and Washington.

While homeowners insurance remained profitable in the Northeast last year, the situation is deteriorating nationwide. According to The New York Times, the number of states where homeowners insurance was unprofitable rose from eight in 2013 to eighteen last year. This trend mirrors a troubling surge in severe storms and wildfires across the Midwest, Southeast, and much of the West.

Insurers are responding to this crisis by increasing premiums, narrowing coverage, and even withdrawing from certain states entirely. This contraction in the insurance market casts a long shadow over the broader economy. Without insurance, securing a mortgage becomes nearly impossible, leading to fewer homebuyers, plummeting real estate values, and declining property tax revenues, which in turn strain local governments’ ability to fund essential services.

States are exploring various strategies to stabilize the industry, from facilitating premium hikes to encouraging resilience in home construction. Yet, with the relentless march of climate change and continued population shifts into high-risk areas, the effectiveness of these strategies remains uncertain.

“Insurance is where many people are feeling the economic impacts of climate change first,” notes Carolyn Kousky, Associate Vice President for Economics and Policy at the Environmental Defense Fund. This ripple effect could further impact housing and mortgage markets, along with local economies.

On a national scale, data from Moody’s indicates that insurers have paid out more in claims than they have collected in premiums over the past decade, and those losses are only increasing. The disparate impact across states is highlighted in state-specific charts, with an option to compare all states concurrently.

In summary, as insurers grapple with mounting losses, homeowners face a future of escalating costs and dwindling options—a direct consequence of an evolving climate reality.