Natural catastrophes will cost the world $450bn annually, with 62% of losses uninsured, leaving $279bn in uncovered damages, according to risk-modelling firm Verisk. Climate change, urban expansion, and rising construction costs — outpacing inflation in the US — drive the growing toll. Last year marked the sixth consecutive year of global insured losses exceeding $100bn, fueled by California wildfires and severe thunderstorms despite no US hurricane landfalls.

Insurers are tightening terms, excluding risks like roof repairs, and exiting high-risk regions. Major carriers including State Farm and AIG have largely left California's regulated market; State Farm declined to renew 72,000 policies in 2024. Progressive reduced coastal exposure in Florida and cut storm and wildfire risk elsewhere while growing in lower-risk markets.

In emerging markets, insurance uptake remains low. Myanmar's March 2025 earthquake caused $12bn in damage with less than $100mn insured. Texas floods in July 2025 killed over 130 people and cost $1.1bn, mostly uninsured due to flood exclusions. Los Angeles wildfires in January 2025 caused up to $65bn in losses; 35% of properties lacked coverage due to insurer retrenchment, pushing homeowners to California's Fair Plan.

Despite rising losses, US home insurers report strong profits from premium hikes and risk reduction. Activist Pete Sikora of New York Communities for Change criticized the pattern: insurers withdraw, shift risk to governments and individuals, break local markets, then raise rates.