Several estimates show that homeowners’ insurance has risen significantly over the past few years, with some prominent Democrats like Rhode Island Sen. Sheldon Whitehouse and House Minority Leader Hakeem Jeffries arguing that climate change is driving up rates. While corporate media outlets like The New York Times have also relentlessly hammered the narrative, some analysts point to the long-overlooked “climate-risk industrial complex,” per American Enterprise Institute Senior Fellow Roger Pielke Jr.
“The notion of ‘climate risk’ to finance, including insurance, led to the creation of a ‘climate risk’ industry, and within this industry, a new family of risk assessment vendors emerged, promising to satisfy the new demands for climate risk disclosure and risk modeling,” Pielke wrote on his website, The Honest Broker, on Dec. 8.
Associate professor at the University of North Carolina Jessica Weinkle told the Daily Caller News Foundation that although many link rising home insurance costs to climate change, the actual climate and loss data do not support that claim. Rather, Weinkle argued that the issue is driven more by modeling uncertainty and potential industry opacity that the average consumer lacks the expertise to fully understand or question.
“The problems we have in insurance have nothing to do with actual changes in climate or extreme weather events,” Weinkle told the DCNF. “To what extent climate change assumptions are embedded in insurance practices is a good question of public concern.”
“Putting this all together results in an incredibly technical policy that is very difficult for the public to understand or discuss. Breaking open that ‘black box’ of insurance is extremely challenging because it is steeped in layer upon layer of specialized technical practice and knowledge,” Weinkle continued. “There’s a lot of money to be made, and consequently, a lot of potential for manipulation.”
Rate Insurance, an insurance broker, noted in a March 2024 study that homeowners’ premiums had risen by 55% since 2019 on a cumulative basis. S&P Global Market Intelligence’s RateWatch application showed in December 2024 that the weighted average effective rate increase for homeowners’ premiums was 10.4% in 2024, following a 12.7% rise in 2023.
While politicians and corporate media have been linking the increases to climate change, Weinkle wrote her dissertation in 2013 on how hurricane risk and insurance pricing in Florida was not an accurate reflection of real-world weather trends. Pielke was notably chair of her dissertation committee at the Graduate School of the University of Colorado, Weinkle wrote on her Substack on Dec. 9.
Weinkle told the DCNF that the insurance industry uses “catastrophe models,” which she argues are a “powerful tool for the industry, but the problem is that they are given more credit for specificity than they actually deserve.”
“Like any other real-world model, catastrophe models represent plausible event scenarios that could happen in the future,” according to the National Association of Insurance Commissioners (NAIC). “By simulating possible events, catastrophe models help inform the user of areas where future events will likely occur, even if there have been no historical events.”
Pielke argued that the Global Association of Risk Professionals (GARP) October 2025 report reveals there is no consensus across insurance vendors as to what “climate risk” means when it comes to physical loss or risk of loss.
As Pielke described in a December 2024 New York Post op-ed, this report has major implications for the industry.
“In the face of different risk estimates, academic research argues that risk-averse insurance companies will set their prices at the level of the most extreme estimate, thereby conservatively encompassing all estimates,” Pielke wrote. “If so, that means that increasing insurance rates would be the result of climate change regulations, and not actual changes in climate.”
One 2020 study from The Geneva Risk and Insurance Review concluded that “ambiguity tends to result in higher premiums than those charged for equivalent, unambiguous risks. … Ambiguity is particularly likely to affect pricing of catastrophe reinsurance, where historical loss data are limited for higher risk layers.”
Meanwhile, major reinsurers like Munich Re and Swiss Re have also justified loss estimates based on climate risk and catastrophe models, pointing to recent natural disasters.
The property and casualty (P&C) industry was set for robust gains at the end of 2025, with the National Association of Insurance Commissioners (NAIC) noting that in the first six months of the year, the American P&C industry “recorded its best mid-year underwriting gain in nearly 20 years.”
One S&P Market Intelligence report found that the third quarter of 2025 was the industry’s best in at least a quarter of a century, according to Carrier Management.
The NAIC noted in its 2024 report that “strong premium growth, driven largely by rate increases, coupled with abating economic inflation, resulted in the first underwriting profit in four years and the highest in the last ten years for the property and casualty (P&C) insurance industry. … Net income nearly doubled compared to last year, attributed to the underwriting profit and healthy investment returns.”
Pielke explained on Dec. 8 that “the P/C industry makes money primarily in two ways — underwriting of insurance policies and investment income. Typically, insurance companies seek to break even, or lose little, on insurance underwriting and earn profits on investment income. … If profits are high and underwriting is steady, then what … accounts for increasing insurance prices … is [in part] climate change. But not how you might think.”
Weinkle traces the conflation of insurance pricing with climate change back to the aftermath of Hurricane Andrew. The catastrophic 1992 storm struck the Southeastern U.S. shortly after the United Nations climate conference in Brazil, as the notion of combatting climate change was emerging as a dominant political narrative.
The pairing of hurricanes, insurance pricing and climate politics laid the groundwork for later institutional efforts to link insurance risk and climate change.
In 2015, when Canadian Prime Minister Mark Carney was still Governor of the Bank of England, he argued in an influential speech that the industry was at risk because extreme weather trends were evolving faster than insurers could understand.
“[T]here are some estimates that currently modelled losses could be undervalued by as much as 50% if recent weather trends were to prove representative of the new normal,” Carney said. “Such developments have the potential to shift the balance between premiums and claims significantly, and render currently lucrative business non-viable.”
The Bank of England released a report on how climate change is affecting the insurance industry, stating that conventional catastrophe modeling did not adequately account for a changing climate.
“The climate-risk industry was born circa 2019,” Pielke argued, noting that the Bank of England started requiring firms to assess their “climate risks” that year. “In (a coordinated) parallel effort, national and international organizations focused on ‘climate risk’ to the financial sector started multiplying.”
“A climate-risk industrial complex has emerged in this space and a lot of money is being made by a lot of people,” Pielke wrote. “The virtuous veneer of climate advocacy serves to discourage scrutiny and accountability.”
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