A memo from insurance insiders in the U.K. and Europe alleges that some companies are pressuring catastrophe modelers to soften climate-risk forecasts so business can keep moving.
That trend could eventually affect Americans through higher premiums, reduced coverage, and more non-renewal notices.
Here's what to know
Published by the U.K. nonprofit Inside Track, "Sounding the Alarm" was authored by current and former senior figures across the U.K. and European property-casualty, reinsurance, and broking markets, as Insurance Business reported.
According to the memo, some firms may request a "haircut" on forward-looking estimates or otherwise "manage down the numbers" when larger physical-risk projections might threaten profitability or market share.
Because European groups supply much of the capital behind U.S. property insurance, the implications extend beyond Europe. Munich Re and Swiss Re accounted for roughly one-quarter of 2022 reinsurance premiums written by the world's 50 biggest reinsurance groups, according to AM Best.
The memo says the industry's default response to worsening physical risk tends to play out in three steps: higher prices, narrower coverage, and retreat from the hardest-hit places. That can mean paying more for less protection — or losing access to private insurance altogether.
TCD Picks » Quince Spotlight
💡These best-sellers from Quince deliver affordable, sustainable luxury for all
More background
Signs of that pattern are showing up in U.S. data. The National Association of Insurance Commissioners found that inflation-adjusted average homeowners premiums climbed about 18% to 43% across its four regions from 2018 to 2024, with the biggest jumps coming in 2023 and 2024.
In 2024 alone, insurers initiated a little over 2 million non-renewals — about 61% above the 2023 total.
When private insurers pull back, many households are pushed into more limited backup options. California's FAIR Plan enrollment rose 43% from September 2024 to December 2025 after the Los Angeles fires destroyed about 12,000 homes.
From 2018 to 2023, last-resort insurers in California, Florida, and Louisiana roughly doubled their policy totals, while only about 4% of U.S. homeowners had flood insurance.
In a study highlighted by NYU Stern, professors Mary Billings and Stephen Ryan, along with co-author Han Yan, found that each one-percentage-point increase in non-renewals was linked to a 0.91-point rise in the foreclosure rate, an 8.3% decline in average single-family home values, and an 8.6% drop in local retail sales.
What's being done?
In December 2024, California approved rules that let insurers use forward-looking wildfire catastrophe models when setting rates.
In exchange, insurers must agree to write more policies in wildfire-distressed areas, and the models must reflect mitigation steps homeowners and communities take.
The rules also call for public review of the models used in rate filings, and the first wildfire model passed that review in 2025. Consumer advocates argue the rules lack sufficient public oversight.
The memo also argues that some insurers rely on inadequate or outdated catastrophe models, or on a small number of vendor base-case models, which can leave them poorly equipped to measure aggregated risk across the firm. The authors also urge pension funds and other investors to examine insurers' short-term incentives and push carriers to focus on reducing risk, not just repricing it or exiting vulnerable areas.
The memo's closing warning is blunt: many of today's policyholders "may suddenly find that they are not our customers tomorrow."
Where can I learn more?
For a closer look at how climate-driven insurance strain is changing coverage and pricing decisions, these articles follow homeowners facing policy pullbacks, market shifts, and rising losses tied to extreme weather.
• In Nova Scotia, Shubenacadie Lakes homeowners face insurers rethinking flood policies after repeated floods.
• Across the U.S., a warming planet is reshaping the health insurance market in quieter ways.
• New research links weather-related insurance claims increasingly to human activity, adding pressure on carriers.
• In the U.S., nearly 40 million homes are at risk of losing private insurance.
Get TCD's free newsletters for easy tips, smart advice, and a chance to earn $5,000 toward home upgrades. To see more stories like this one, change your Google preferences here.
