Insurance Curator WASHINGTON (Feb. 6, 2026) — Insurance companies across high‑exposure coastal and wildfire corridors have accelerated large‑scale nonrenewals and steep premium increases in recent years, forcing some homeowners to move, pay far higher rates or seek last‑resort state coverage as insurers shrink their exposure to climate‑driven catastrophe risk. The trend, which regulators and federal investigators say is concentrated in California and Florida but now visible in multiple U.S. regions and other advanced economies, stems from mounting claims costs, rising reconstruction expenses and shifts in the reinsurance market that together have made business in those zones less profitable or commercially viable for insurers. (home.treasury.gov)
What happened, who it affects and why
- Who: Major national insurers (including State Farm, Allstate and several regional writers), state insurers of last resort and increasingly smaller specialty carriers. (sfchronicle.com)
- What: Carriers have issued block nonrenewal notices, limited new business in exposed ZIP codes and sought emergency rate increases, while state FAIR‑plan programs and other residual markets have absorbed many displaced policyholders. (sfchronicle.com)
- When: The pattern intensified from about 2023 onward and was documented in federal and congressional analyses published in 2024–25; regulators continued to take emergency steps through 2025 and into 2026 after major wildfire and hurricane losses. (home.treasury.gov)
- Where: Concentrated in wildfire‑prone California and hurricane‑exposed Florida but visible in Gulf Coast states, parts of the Northeast, the Great Plains (hail) and other areas where catastrophe frequency and severity have climbed. Officials in several states have announced moratoria, depopulation plans and legal reforms. (home.treasury.gov)
- Why: Insurers point to higher claim frequency and severity, construction‑cost inflation, and a hardening earlier in the reinsurance cycle followed by volatile reinsurance capacity, which together have eroded returns on homeowners books and prompted risk concentration management. Regulators and federal officials say climate‑driven losses and gaps in data and market mechanisms have exposed homeowners and communities to disruptive availability and affordability problems. (home.treasury.gov)
New national data and the scale of nonrenewals
A major January 2025 Treasury Department report, built from the Federal Insurance Office (FIO) collaboration with the National Association of Insurance Commissioners, provided the most granular nationwide snapshot yet of homeowners insurance. It found that between 2018 and 2022 average homeowners premiums rose roughly 8.7 percent faster than inflation and that the 20 percent of ZIP codes with the highest expected annual climate‑related losses paid an average of $2,321 per policy — 82 percent more than the lowest‑risk ZIP codes. The report also showed that policy nonrenewal rates were about 80 percent higher in the highest‑risk ZIP codes than in the lowest, and that average nonrenewal rates rose faster in high‑risk areas, indicating declining availability. (home.treasury.gov)
Congressional investigations reinforced those findings. A Senate Budget Committee probe that collected county‑level nonrenewal data from dozens of the largest insurers documented large spikes in nonrenewals in more than 200 counties and highlighted that nonrenewals are concentrated where climate and weather perils are intensifying. “The climate crisis that is coming our way … actually is coming through your mail slot, in the form of insurance cancellations, insurance nonrenewals and dramatic increases in insurance costs,” Senate Budget Committee Chairman Sheldon Whitehouse said at the committee’s Dec. 18, 2024 hearing. (congress.gov)
Case study: California wildfires, block nonrenewals and moratoria
California illustrates the dynamics and the political backlash. Major carriers stopped writing new homeowners business or announced block nonrenewal programs after repeated catastrophic wildfire seasons and a run‑up of insured losses. State Farm’s California subsidiary — which long ago stopped accepting most new residential business in the state — announced block nonrenewals affecting tens of thousands of policies and subsequently applied for emergency rate increases as wildfire losses mounted. The company said it would “continue to meet our customers’ needs” while regulators pressed for commitments to halt nonrenewals in fire zones. “We’re built for this,” State Farm spokesman Sevag Sarkissian told the San Francisco Chronicle as the company handled a surge of claims after January 2025 fires. (sfchronicle.com)
California Insurance Commissioner Ricardo Lara has used statutory authority to impose moratoria on cancellations and nonrenewals in declared wildfire disaster ZIP codes and pressed for market reforms that pair consumer protections with incentives for insurers to write in distressed areas. “As we face increasingly catastrophic disasters, our responsibility is to assist people in their recovery while also ensuring we are better prepared for the next event,” Lara said while rolling out a legislative package that includes grants for home hardening and limits on fees that can erode claim payouts to survivors. Regulators also negotiated rules designed to nudge insurers to keep a minimum share of business in distressed ZIP codes if they seek higher rates statewide. (insurance.ca.gov)
The state’s FAIR Plan — a residual market intended as insurer‑of‑last‑resort — ballooned as private carriers pulled back. The plan’s policy counts rose sharply in 2024–25, and it carried billions in wildfire claims after major Los Angeles‑area conflagrations; critics and courts have contested how assessment and pass‑through charges are allocated when FAIR pays claims. California’s experience shows how private market withdrawals can move risk to state‑backed or shared mechanisms, which in turn raise questions about long‑term solvency and assessments on private policyholders. (latimes.com)
Case study: Florida coastal risk, Citizens and depopulation
Florida’s market has been strained for years by hurricane exposure, elevated reinsurance costs, and litigation and claims‑handling dynamics that have driven some specialized carriers into insolvency. The state‑run Citizens Property Insurance Corp., created as a backstop, grew into one of the nation’s largest homeowners carriers as private options narrowed; regulators and lawmakers have promoted “depopulation” plans that allow private insurers to assume blocks of Citizens policies to shrink the state portfolio and restore competition. As of mid‑2025, regulators approved multiple assumptions that could move hundreds of thousands of policies back to private carriers, but private offers can trigger policyholder displacement from Citizens under price rules and introduce premium shocks for individual homeowners. (wusf.org)
Industry rationale: losses, reinsurance and underwriting
Insurers cite rising claim severity (largely climate‑linked), construction inflation and a reinsurance environment that has tightened after record losses as the business drivers behind nonrenewals and underwriting pullbacks. The reinsurance market itself has been volatile: after a “hard” market in 2022–24 that pushed prices up, capital inflows including from insurance‑linked securities and strategic capacity shifts produced a more competitive environment at the Jan. 1, 2026 renewals, with brokers and analysts reporting property catastrophe pricing declines of roughly 10–20 percent for some accounts — a swing that reshaped cedant behavior and treaty design. That volatility makes long‑term planning challenging for primary insurers that must decide where to concentrate capital and which perils to cede. (reinsurancene.ws)
Insurers also say improved modeling and more granular risk segmentation have changed the economics: areas once broadly insurable now register as persistently loss‑making at legacy pricing and deductibles. Firms argue that underwriting discipline and price adequacy are necessary to avoid transferring eventual losses to solvency backstops or to remaining policyholders. “Insurers are responding to larger realized disaster losses, better data and risk models and growing reinsurance costs,” testimony to the Senate committee said. (goodmorningamerica.com)
Consequences for homeowners and housing markets
The immediate consumer impacts are familiar and severe: forced shopping at renewal, sudden premium jumps, placement in residual market plans with limited coverages and higher deductibles, and in some cases inability to obtain mortgage financing without an active homeowners policy. Local housing markets can suffer declining values if buyers face difficulty obtaining insurance; municipal tax bases can be affected when high‑value homes depart the market or move to different risk classifications. Investigations and local reporting chronicle individuals and neighborhoods that must relocate or accept sharply reduced insurance options. (sfchronicle.com)
“We are in the business of helping people recover,” Ricardo Lara told a public forum while ordering moratoria in wildfire zones; his office also has called for incentives to harden homes and for greater transparency around insurers’ catastrophe models. Consumer advocates have demanded clearer disclosures on why individual policies are nonrenewed and more power for state regulators to hold carriers to standards of service and solvency. (insurance.ca.gov)
Regulatory responses and policy proposals
State and federal authorities have pursued a mix of emergency and structural responses. Regulators have used moratoria on nonrenewals immediately after declared disasters; state legislatures and departments of insurance are considering or enacting measures that would expand post‑disaster protections, fund home hardening grants, change FAIR‑plan authorities and require more granular insurer disclosures. The Treasury/FIO report has also prompted calls for continued nationwide data collection to monitor availability and affordability. In California, Commissioner Lara proposed a package of bills and rule changes to promote mitigation, limit fee extractions from claims and encourage insurers to write in distressed areas — while also warning that the market will not stabilize without addressing broader climate‑risk drivers. (home.treasury.gov)
Market solutions under consideration include state‑sponsored reinsurance backstops (to reduce the cost of catastrophe layers), targeted subsidies or vouchers for mitigation, incentives for insurers to offer risk‑reduction discounts, and stricter consumer protections on nonrenewal notice and claims handling. Analysts caution, however, that subsidy or backstop programs must be carefully designed to avoid moral hazard and to ensure fiscal sustainability. (home.treasury.gov)
What insurers say — and what critics answer
Industry groups stress that risk‑based pricing and underwriting are core to solvency. In congressional testimony and public filings, insurers have said they must limit concentrations of exposure, price for increased loss potential and manage reinsurance towers tightly to protect capital and maintain long‑term commitments to policyholders. Critics say some carriers have used model assumptions and pricing to shed risk rather than invest in mitigation or market solutions, and they call for greater transparency in catastrophe modeling and reinsurance arrangements. Consumer advocates pressed the Treasury and state departments for better data and for regulatory remedies that protect vulnerable homeowners while preserving market discipline. (home.treasury.gov)
A future of adaptation, redistribution or retreat?
Analysts and regulators say three broad paths — adaptation, redistribution and retreat — will shape outcomes. Adaptation (hardening homes, improved land‑use and defensible‑space measures) can lower exposure and attract insurers back, but requires public and private investment. Redistribution (state reinsurance, FAIR‑plan funding reforms and targeted subsidies) can preserve coverage but shifts risk to taxpayers or other policyholders. Retreat (managed or market‑driven withdrawal from certain locales) can preserve insurer solvency but would also reshape real‑estate markets and communities. The policy debate now centers on balancing those options to maintain housing stability, protect taxpayers and keep insurance markets functional. (insurance.ca.gov)
What homeowners should know and do
Regulators and consumer groups offer practical steps: review renewal notices closely and ask insurers for the reason if coverage is declined; shop with independent agents; obtain multiple quotes; explore mitigation measures (roofing, ember‑resistant vents, landscaping) that can lower premiums or eligibility for coverage; and in states with FAIR plans or depopulation programs, compare offers carefully because an apparently similar policy can carry higher premiums or different deductibles. For households in declared disaster areas, emergency moratoria may temporarily protect coverage, but those protections are time‑limited and vary by state. (insurance.ca.gov)
Outlook
The squeeze in high‑exposure regions is not only a short‑term market reaction but reflects deeper shifts in risk, capital flows and public policy. Federal and state data releases in 2024–25 made the scale of nonrenewals and premium divergence visible for the first time, prompting regulatory action and public debate. Whether the market moves toward higher prices and broader availability through mitigation and capital solutions — or toward persistent geographic differentiation and reduced private‑market coverage — will depend on policy choices, reinsurance cycles and the trajectory of climate‑driven losses in the years ahead. Treasury and congressional reports have framed the dilemma as an economic problem as well as an environmental one, and lawmakers and regulators in the states most affected have signaled continued attention and intervention. (home.treasury.gov)
— Reporting by [Staff]; additional reporting from Treasury, state insurance departments, the San Francisco Chronicle and the Los Angeles Times. Sources include the U.S. Department of the Treasury/Federal Insurance Office, the Senate Budget Committee hearing record, the California Department of Insurance, reporting by the San Francisco Chronicle and the Los Angeles Times, WUSF/News Service of Florida, and reinsurance market analyses from Evercore/industry brokers. (home.treasury.gov)