Climate change and insurance

by Elissa Tennant

Most people tend to think about climate change in terms of environmental damage or public health risks, but there’s another, often overlooked issue: insurance costs. 

Seven percent of Americans don’t think global warming is happening, but their insurance company certainly does! Climate change and insurance costs are interlinked. As wildfires, hurricanes, hailstorms, and other disasters grow in severity and scope, insurers are rethinking how, where, and if they offer coverage.

The Rising Costs of Home Insurance

Extreme weather events are becoming more frequent, intense, and expensive. The destruction from these events translates into more frequent insurance claims—and more expensive insurance claims. As carbon pollution fills our atmosphere, risks of weather-related property damage increase and people seek financial help from insurers to cover the rising costs.

However, the current insurance industry business model is predicated on a modest rate of disasters that simply doesn’t exist anymore. The high costs of new and increased disasters are threatening to put insurers out of business or force them to reduce services. Basically, insurance companies can’t keep up anymore.

In 2023 alone, property and casualty losses from catastrophic events in the U.S. totaled an estimated $65 billion. In 2024, NOAA tracked 28 separate weather disasters that each caused over $1 billion in damages. As a result, insurance companies are paying out more than ever before, and that’s triggering a ripple effect across the industry.

To manage their mounting risk, insurers are raising premiums significantly. Between 2021 and 2024, homeowners insurance rates rose 27% nationally. In high-risk areas, rates have climbed even higher. In some cases, homeowners are seeing their premiums double or triple over just a few years, rising much faster even than inflation. The state of California recently gave State Farm permission to raise rates 17% in the wake of the 2025 wildfires.

How much faster than inflation average U.S. home (green) and automobile (red) insurance premiums have risen from 2008 through 2024. (Insurance premium data: Federal Reserve Bank of St. Louis. Graphic: Dana Nuccitelli.

Climate change isn’t just bringing higher premiums. States that are exposed to more natural disasters experience high insurance rates and low housing values, further exacerbating America’s affordable housing issues. And in some areas, private insurers are simply backing out, leaving people with little to no insurance options. Potential buyers can’t even get a mortgage without insurance.

According to Cliff Rossi, professor at the University of Maryland and financial risk expert, “In many places of the country, we’re finding that large insurance companies are pulling out altogether, like in California and Florida, as a result of either wildfires that have happened and are raging in those states, or flooding in other states. It’s a huge issue, and I think it’s the next crisis that we’re going to see in housing within the next five to 10 years, easily.”

Insurance increases have left many homeowners scrambling. Some can’t find any private insurer willing to cover their homes. Others are forced to settle for limited, high-deductible policies that offer less protection at a higher cost.

Government’s Role in the Insurance Market

When private insurers back away, the government often steps in. Federal and state governments have attempted to solve the problems created by climate change and insurance prices. Programs like the National Flood Insurance Program (NFIP), managed by FEMA, offer coverage for homes in flood-prone areas. But the NFIP has long been criticized for outdated flood maps, low caps on payouts, and rising premiums of its own. It’s also billions of dollars in debt, due in part to the frequency and severity of recent storms.

Some states have also created their own insurance programs. In Florida and California, state-run “insurer of last resort” programs are now covering more properties than ever before. But these programs are often underfunded and vulnerable to collapse in the face of a truly catastrophic event. They also face similar criticisms to the NFIP program.

Government action can’t solve this problem alone. As climate change escalates, it’s clear that both private and public insurance systems are struggling to keep up.

The Future of Home Insurance in a Changing Climate

Looking ahead, the insurance industry is likely to make big changes in response to climate risks. Some companies are already moving toward climate-focused underwriting practices that take into account not just a property’s location, but its resilience to extreme weather. That could mean higher deductibles for homes in risky areas, stricter coverage limits, or incentives for homes built with fire-resistant or flood-proof materials.

Homeowners, too, will have to adapt. That may mean investing in structural upgrades (like storm shutters, raised foundations, or fire- and hail-resistant roofs) to qualify for insurance or reduce costs. In some cases, it could even mean moving away from high-risk areas entirely. The idea of “climate migration” is being taken seriously by insurance companies, real estate professionals, and policymakers alike.

What Can We Do?

It’s clear climate change is impacting us today, but our communities are not equipped to withstand the consequences. Insurers, governments, and homeowners all have a role to play in solving the problem and taking climate action.

In the short term, we need disaster relief programs, storm-proof houses, and affordable insurance options. But beyond adapting to immediate climate impacts, we must also address the long-term problem: climate change itself. By advocating for climate change solutions now, we can minimize long-term impacts.

We can’t control the weather, but we can control how we respond to it. That means preparing our communities for climate risks and reducing the emissions driving those risks. The future of climate change and insurance (and the security of American families) depends on it.

Here’s what you can do right now:

Talk to your friends and family about climate change

Electrify your home with clean energy

Join Citizens’ Climate Lobby to advocate for policy solutions that will stop the pollution that’s overheating the planet

The post How climate change is making your home insurance costs increase appeared first on Citizens' Climate Lobby.

How climate change is making your home insurance costs increase

British International Investment (BII), a UK government-owned and aid-funded company, has a portfolio of overseas fossil-fuel assets worth hundreds of millions of dollars, Carbon Brief can reveal.

In 2020, BII committed to “aligning” its “future” investments with the Paris Agreement and since then it has doubled its renewable-energy funding.

But, as of 2023, the last year for which data is available, it also still had a large portfolio of gas-fired power plants across Africa and south Asia.

Multiple freedom of information (FOI) requests by Carbon Brief reveal fossil-fuel energy and related projects worth nearly $700m (£526m) on BII’s books, which represents about 6% of its assets in 2023.

The FOI results also show that, at the end of last year, BII still had $70m (£53m) of unspent funds earmarked for foreign fossil-fuel companies in the coming years.

BII has not breached its own investment guidelines and says its fossil-fuel exposure fell further in 2024 as it aims to “manage and responsibly exit” these assets.

However, MPs and campaigners have criticised BII’s legacy fossil-fuel investments for “conflicting” with UK climate goals and diverting increasingly scarce aid resources.

Climate pledge

BII is the UK’s development finance institution (DFI), a publicly owned, for-profit company that invests in businesses in developing countries.

These investments are meant to promote economic development, especially via projects – including new energy infrastructure – deemed “too risky” for private investors.

BII largely supports itself using financial returns from its existing portfolio, which was worth approximately £7.3bn ($9.2bn) in 2023.

However, the UK government has also provided BII with billions of pounds from its aid budget. This support has grown even amid massive cuts to UK aid, with BII receiving an extra £400m last year due to reduced government spending on housing asylum seekers.

The government has also been leaning more on BII to reach its international climate finance goals.

Despite being wholly owned – and partly funded – by the Foreign, Commonwealth and Development Office (FCDO), BII has an “arm’s length” relationship with the UK government and makes its own investment decisions.

In 2020, the previous Conservative government committed the UK to ending new overseas fossil-fuel funding beyond March 2021.

This came after BII – then known as CDC Group – had pledged in its 2020 climate strategy that it would not make any new investments that were “misaligned with the Paris Agreement”, based on a Task Force on Climate-related Financial Disclosures framework.

Then-chief executive Nick O’Donohoe stated that the climate strategy would “shape every single investment decision we make moving forward”.

This was hailed as an end to fossil-fuel financing by the institution, despite some remaining “loopholes”. Notably, its fossil-fuel policy allowed for new investments in gas projects if they were deemed “consistent with a country’s pathway to net-zero by 2050”.

Since making its pledge, BII has repeatedly come under fire from MPs and campaigners for continuing to hold “active investments” in fossil-fuel companies.

Fossil assets

BII says that its fossil-fuel portfolio, which mainly consists of gas-fired power plants in “power-constrained” African nations, “has been on a steady downward trajectory since 2020”.

However, the company has not released data on the value of its fossil-fuel assets since 2021, citing “commercial sensitivities”.

In September 2024, Carbon Brief filed an FOI request with BII to obtain data on the company’s fossil-fuel and renewable-energy investments, as well as their asset value.

Following more than six months of back-and-forth – including Carbon Brief requesting an internal review of its FOI request – the company provided much of the information that was originally requested at the end of March 2025.

This included annual data on projects that BII has already committed to support, such as the Sirajganj 4 gas plant in Bangladesh and the Amandi Energy gas plant in Ghana.

As the chart below shows, BII’s cumulative commitments to fossil-fuel companies have remained roughly the same since its climate strategy in 2020. This is in line with its pledge to provide no “new commitments” to most fossil-fuel projects.

One exception is an extra $20m (£15m) in 2021 for Globeleq, a company controlled by BII that primarily supports gas power in Africa. An investment in a Mozambique gas project that year by Globeleq was deemed “Paris-aligned” and, therefore, allowed under BII’s rules.

Meanwhile, BII’s total commitments to renewable energy projects have more than doubled, from $894m (£672m) to $2.1bn (£1.6bn), between 2020 and 2024.

Once funds have been “committed”, they can remain “undrawn” for many years. This means that money committed before 2020 can still be distributed without breaching BII’s pledge. Carbon Brief asked BII how much of these “commitments” remained undrawn each year.

This revealed that BII has continued sending money to fossil-fuel projects since its 2020 pledge, disbursing around $57m (£43m) over this period. At the end of 2024, there was still $67m (£50m) of “undrawn” fossil-fuel finance waiting to be spent.

BII tells Carbon Brief that, as “commitments” are legal contracts, it is obliged to provide these funds as and when they are required.

Beyond “direct” investments in energy projects, BII has also made “indirect” commitments to fossil fuels via private financial institutions. The company tells Carbon Brief it does not have details of how much these third-party funds invest in fossil-fuel projects.

Daniel Willis, finance campaign manager at the NGO Recourse, points to examples such as Gigajoule and Ademat, companies that have received new finance injections for fossil-fuel projects beyond the 2020 date, on BII’s behalf. (Again, this is allowed under BII’s guidelines.)

Willis tells Carbon Brief that these investments and the continued payments from existing commitments “clearly go against the spirit of the UK government’s fossil fuel policy”.

BII initially rejected Carbon Brief’s request for the “net asset value” of every fossil-fuel investment in its portfolio. It argued that disclosure could weaken its commercial position.

However, the company eventually agreed to disclose the aggregate value of its fossil-fuel assets for the period 2020-2023.

The data reveals that, as of 2023, BII still owned $591m (£444m) worth of gas-fired power plants and other fossil-fuel energy assets, rising to $676m (£508m) when indirect assets are included. This amounts to around 6% of BII’s assets.

While BII declined to provide Carbon Brief with the 2024 figures, a company spokesperson tells Carbon Brief that they plan to release them “this summer”, adding:

“Our 2024 annual report and accounts…will show that our exposure to fossil-fuels assets has fallen 39% since 2020 and now makes up just 6% of our total portfolio. Over the same period, the value of our climate-finance portfolio has increased by 122% to $2.5bn [£1.9bn] and now accounts for 26% of our total portfolio.”

As the chart below shows, there has already been a gradual drop in the value of BII’s direct fossil-fuel energy investments since 2020. The decline can likely be attributed to investees paying off debts to BII, fossil-fuel assets losing value and – to some extent – BII exiting smaller investments.

With evidence that BII’s fossil-fuel portfolio is declining in value, Sandra Martinsone, policy manager at the international development network Bond, tells Carbon Brief that “sooner or later” these will likely become stranded assets:

“The longer BII holds on to these fossil-fuel investments, the higher the risk of losing the invested aid pounds.”

The drop in the value of BII’s indirect fossil-fuel and “other carbon-related” assets – which includes non-energy companies that serve fossil-fuel companies – has been sharper. This can be largely attributed to BII ending support for fossil-fuel trade and supply chains in 2022.

‘Worrying trajectory’

In its FOI response, BII says that it “seeks to manage and responsibly exit fossil-fuel assets”. However, NGOs and politicians have raised concerns about the pace of change.

Natalie Jones, a policy advisor specialising in fossil-fuel phaseout at the International Institute for Sustainable Development (IISD), tells Carbon Brief that while BII has not breached its own climate guidelines:

“The fact that fossil fuel investments remain on BII’s books is not a good look for the organisation, bearing in mind its 2020 commitment to aligning its activities and investments with the Paris Agreement and the UK’s 2021 policy to end all international public support for fossil fuels.”

Civil-society groups have repeatedly called for BII to set a timeline for divesting from fossil fuels. They have even argued that, in the context of “drastic” UK aid cuts, BII should not receive more aid funding and instead reinvest funds from some of its existing assets.

Criticism of BII’s approach to fossil fuels is captured in a 2023 report by the International Development Committee of MPs. It refers to BII legacy investments “conflicting” with UK policies, including the alignment of all aid with the Paris Agreement.

The report also notes that there “does not appear to be a definitive path for BII exiting those fossil-fuel investments or transitioning its existing investment portfolio to green energy”.

Committee chair and Labour MP, Sarah Champion, says that, while the most recent data is not yet publicly available, the figures released to Carbon Brief point to a “worrying trajectory” in BII’s fossil-fuel investments. She tells Carbon Brief:

“It appears that BII has stayed on this worrying trajectory. This must change: as the government proposes a new strategic direction for UK aid spending, focusing on poverty reduction and genuinely responsible investment must be BII’s number one priority.”

In a statement alongside its FOI response, BII says that “forced divestment increases the likelihood that buyers of such assets would be less responsible owners, thereby increasing the future risk of negative climate impact”.

It also says that “being viewed as a forced seller” could reduce the value BII could obtain from those assets. This position was supported by the previous Conservative government.

Jones tells Carbon Brief that concerns about the responsibility of new owners are legitimate:

“However, it would be great to see from BII a plan to responsibly exit or, even better, decommission their fossil fuel assets. There is a case to be made for a responsible exit that would free up funds for much-needed climate finance.”

BII argues that, with around 600 million Africans still lacking access to electricity, gas power remains “essential” for providing “baseload” power to many nations on the continent.

This position has been supported by a number of African governments. However, many civil-society groups, both in Africa and around the world, argue that developed countries should focus financial resources on expanding clean power capacity in developing countries.

Nick Dearden, director of Global Justice Now, which has previously questioned the legality of the BII-controlled Globeleq supporting gas power in Africa, tells Carbon Brief it is “inappropriate” for aid money to be spent this way:

“It’s also trapping the countries that are building this stuff into a type of energy which is on its way out.”

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The post Revealed: UK development body still has $700m invested overseas in fossil-fuel assets appeared first on Carbon Brief.

Revealed: UK development body still has $700m invested overseas in fossil-fuel assets

Welcome to Carbon Brief’s DeBriefed.
An essential guide to the week’s key developments relating to climate change.

This week

US budget bill ‘would kill IRA’

WAYS AND MEANS: The future of Joe Biden’s signature climate policy, the Inflation Reduction Act (IRA), is in doubt after Republicans on two key Congressional committees passed budget proposals that “would effectively kill” it, reported Heatmap News. The proposals would end clean-energy tax credits and rebates for electric vehicle (EV) purchases, “claw back” climate grants and “slash” related spending, said Reuters.

DEFENCE DOUBTS: While a “small subset” of House Republicans have been trying to defend the IRA, it is unclear if they would block passage of the wider budget bill to get their way, according to E&E News. In the Senate, Politico said “some” Republicans are “pushing back” on the current proposals. A New York Times feature said Republican districts “have the most to lose” if all of the IRA tax credits are repealed. Semafor reported Republicans were “wrestling with possible failure” of the bill, in the face of opposition from Democrats and their own ranks. (Law firm Grant Thornton said policymakers were hoping to pass the bill by 4 July.)

SOCIAL COST: Meanwhile, a new White House memo directed US government agencies to disregard economic damages from climate change, reported E&E News. Under a headline asking, “What’s the cost of pollution? Trump says zero”, the New York Times explained that the “social cost of carbon” had been used for more than two decades to help weigh the costs and benefits of federal policies and regulations. It said the move could face legal challenges.

Around the world

• DOWNPOUR DEATHS: More than 100 people were killed by floods in the Democratic Republic of the Congo, Agence-France Presse reported. Extreme rainfall also killed at least seven people in Somalia, the Associated Press said.
• PARIS PERIL: A UK opposition minister falsely attacked climate science and said his party could exit the Paris Agreement if elected, the Guardian said. The Guardian also reported on how Australia’s new opposition leader “could abandon net-zero”.
• GERMAN GAS: New economy minister Katharina Reiche wants more gas-fired power plants, according to Die Zeit. The country’s climate council warned the new government’s plans could breach climate goals, said Clean Energy Wire.
• DENGUE DANGER: Colombia’s El Espectador reported on rising climate-driven risks from dengue fever in Brazil, Costa Rica, Ecuador, Mexico and Panama.
• COP30 CREW: The Brazilian COP30 presidency has appointed 30 envoys, including “key liaisons” for strategic regions such as China’s Xie Zhenhua, Jonathan Pershing from the US and former UNFCCC chief Patricia Espinosa, Climate Home News said.

60%

The yearly rise in EV sales in emerging markets in Asia and Latin America in 2024, according to new data from the International Energy Agency.

Latest climate research

• Even passing 1.5C of global warming temporarily would trigger a “significant” risk of Amazon forest “dieback”, said research covered by Carbon Brief.
• Rapidly rising emissions from China’s agricultural machinery could “hinder” the country’s push towards net-zero, according to a study covered by Carbon Brief.
• Findings in Environmental Research Letters found that the benefits of CO2 “fertilisation” on forests are likely to be constrained by warming.

(For more, see Carbon Brief’s in-depth daily summaries of the top climate news stories on Monday, Tuesday, Wednesday, Thursday and Friday.)

Captured

For the first time on record, China’s CO2 emissions have fallen as a result of clean energy expansion rather than weak growth in electricity demand, according to new analysis for Carbon Brief. The analysis, which has been covered by outlets including AFP, Semafor and the New York Times, found that China’s emissions from fossil fuels and cement fell 1.6% in the first quarter of 2025 and are now 1% below the peak reached in March 2024. The months ahead will be critical for what comes next, as Beijing is working to finalise its next international climate pledge for 2035 and its five-year plan for 2026-2030.

Spotlight

How Poland started speeding away from coal power

This week, Carbon Brief reports on coal falling to barely half of Poland’s power supplies.

The first round of Poland’s presidential election is on Sunday and Rafał Trzaskowski, from prime minister Donald Tusk’s centre-right party Civic Platform, is favoured to win.

Long seen as one of the world’s most coal-reliant countries, Poland’s electricity system is in the midst of dramatic and increasingly rapid change.

When Poland joined the EU in 2004, coal-fired power stations supplied 93% of the country’s electricity. Coal accounted for more than three-quarters of the total as recently as 2018, the year the country hosted COP24 in Katowice.

Since then, a gradual shuffle away from coal has turned to a sprint.

In 2024, coal generated little more than half of Poland’s electricity, according to data from thinktank Ember – and a coal power phaseout by 2035 is now seen as a realistic prospect.

While the topic has not played a big role in the election campaign, there is now broad public acceptance that “coal is over in Poland”, said Joanna Maćkowiak-Pandera, president of Polish thinktank Forum Energii. She told Carbon Brief:

“The extreme rightwing tries to claim that coal is the future and there is coal for [another] 400 years…[But] even the coal-mining sector does not believe it.”

As of 2024, coal contributed just 53.5% of electricity generation in Poland, with wind and solar making up 23.5%, gas power 12.1% and other renewables another 6.3%.

Coal ‘death spiral’

The “death spiral” for coal power is due to the high cost of coal mining in Poland, the old age of coal power plants, pressure from climate policies such as the EU emissions trading system (EUETS) and a loss of market share to renewables, said Maćkowiak-Pandera:

“You can be pro-coal, but you will not change the economics, physics, geology and the reality of the financial market.”

Until 2023, the right-wing Law and Justice party (PiS) had held the reins of government, having won the 2015 election after promising to protect the coal industry.

Following power cuts that summer, however, PiS increasingly accepted that renewbles – particularly solar power – could support energy security, explained Maćkowiak-Pandera.

(Renewables enjoy broad public support and are associated with energy security, she said.)

With backing from government policy, Poland’s solar capacity leapt from just 200 megawatts in 2015 to more than 20 gigawatts in 2024 – a 100-fold increase.

Still, PiS strongly resisted calls to phase out coal. In 2020, it struck a deal with unions to subsidise the Polish coal-mining industry until 2049. The subsidies remain in place.

After winning parliamentary elections in 2023, Tusk promised a “much faster energy transition” based on renewables and nuclear power, said Maćkowiak-Pandera.

While utility firms would “really love” to phase out coal plants within as little as three to five years, there is a growing consensus around 2035 as a more achievable end date, she said:

“It’s really not controversial any more…I speak with politicians, with utilities, with [electricity] transmission system operators, even with miners. Everybody is aware of the situation.”

Instead, there is a practical conversation around how best to replace coal at the lowest cost, explained Maćkowiak-Pandera.

This will mean more renewables, but also the flexible capacity needed to manage the grid – including some new gas-fired power plants – as well as energy storage and market reforms, she said.

Poland’s rapid transition may not have made many headlines, but other major coal-burning countries are starting to pay attention.

Maćkowiak-Pandera has welcomed delegations from China, South Africa, Mexico and Brazil, eager to learn about Poland’s experience. She added:

“For Chinese partners, it’s interesting because they like [our] pragmatic approach…they like that Poland [is] sometimes not mentioning climate, [but] is doing it anyhow.”

Watch, read, listen

CHINESE CROWING: A widely shared blog post on nationalist media outlet Guancha said China was taking climate action to “win the future energy revolution” and, among other things, to “save at least $600bn” on imported oil by shifting to EVs.

‘RUNNING BLIND’: For the Bulletin of Atomic Scientists, climate scientist Peter Gleick said the Trump administration’s “purges” of climate research were “threats to national security”.
‘REALISM’ REJECTED: The Wicked Problems podcast discussed the “defeatism” behind a recent initiative calling for “climate realism”, as well as the “abundance agenda”.

Coming up

• 18 May: Poland presidential election
• 19 May: EU-UK summit, London
• 19-23 May: First UN climate week 2025, Panama City, Panama
• 19-27 May: World Health Assembly 2025, Geneva, Switzerland

Pick of the jobs

• European Commission, programme manager (climate change and sustainable energy) | Salary: Unknown. Location: Brussels, Belgium
• Dialogue Earth, southeast Asia editor | Salary: £43,370. Location: London
• Royal Botanic Gardens Kew, postdoctoral research associate in genomics and climate change | Salary: £43,751. Location: London

DeBriefed is edited by Daisy Dunne. Please send any tips or feedback to debriefed@carbonbrief.org.

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The post DeBriefed 16 May 2025: Has China’s CO2 peaked?; US bill ‘would kill IRA’; Poland’s coal collapse appeared first on Carbon Brief.

DeBriefed 16 May 2025: Has China’s CO2 peaked?; US bill ‘would kill IRA’; Poland’s coal collapse