Climate Disasters Are Breaking America’s Insurance System

Four years after Hurricane Ida destroyed their Louisiana home, Jennifer and Dean Bye are still living in a house with exposed plywood, mold-stained windowsills, and bare concrete floors. Their three children play in rooms stripped down to the studs. The family did everything right—they had homeowners insurance with an A-rated company and never missed a payment. But their insurer, FedNat, went bankrupt before paying their $450,000 claim.

The Byes’ nightmare illustrates a growing crisis across America: climate change is breaking the insurance industry. Between 2018 and 2023, insurance companies dropped nearly 2 million policies in disaster-prone states like Florida, Louisiana, California, and Texas. Many insurers simply went bankrupt—unable to handle the mounting losses from increasingly intense hurricanes, wildfires, and floods supercharged by global warming.

When private insurers fail or flee, homeowners get pushed onto expensive state “insurance of last resort” programs that offer limited coverage at high costs. California’s program has grown 167% since 2021, while Florida’s took on 800,000 new policies between 2019 and 2023. This creates a “cycle of doom” where more disasters deplete state programs, driving up costs for everyone and pushing even more insurers out of the market.

The solution isn’t just attracting new insurance companies—it’s stopping people from building in high-risk areas and helping existing communities become more resilient. Yet as the insurance crisis deepens, Americans paradoxically continue moving into disaster-prone regions. Without major policy changes to discourage risky development and mandate climate adaptation, families like the Byes will keep paying the price for a system unprepared for our changing climate.