Climate change is expected to cause significant financial losses, with a new report estimating that human-driven global warming could result in $1.47 trillion in net property value losses due to rising insurance costs and shifting consumer demand.
The report, from First Street, a climate risk financial modeling company, reveals that the five largest metro areas likely to see the biggest spikes in insurance premiums are Miami, Jacksonville, Tampa, New Orleans, and Sacramento. Insurers are increasing their rates faster than mortgage payments, making it difficult for homeowners to afford coverage.
Climate change is also driving migration away from high-risk areas, particularly in the Sun Belt and West regions of the US. The devastating wildfires in Southern California have highlighted the issue, with estimated insured losses of $20-30 billion.
According to First Street’s research, if unrestricted risk-based insurance pricing were adopted by 2055, average insurance premiums across the country would increase by 29.4%, driven primarily by climate-related risks. This would lead to an influx of over 55 million Americans voluntarily relocating within the US to areas less vulnerable to climate risks.
However, not all regions will benefit from this trend. Some metropolitan areas are already experiencing population declines due to increased climate risk and high housing costs. In contrast, northern states like Montana and Wisconsin could attract more people due to their greater climate resilience.
First Street’s report is based on peer-reviewed models of climate change impacts, but acknowledges that its results should be used with caution due to limitations such as the exclusion of climate adaptation measures and inflation. The company’s head of climate implications warns that these results are best used to identify areas at risk for climate-related losses in value.
Source: https://www.axios.com/2025/02/03/climate-change-insurance-costs-real-estate