A new report from the World Wildlife Fund (WWF) warns that extreme weather events in the USA are creating an insurance crisis.
‘Tackling The Insurance Protection Gap’ addresses the widening of the insurance gap – the difference between total economic losses and insured losses from extreme weather events – and finds that due to the increased frequency and severity of extreme weather, which is leaving millions of households and businesses financially exposed, investment must be made in nature-based solutions to deliver cost-effective protection against floods, heat, and storms.
Developed by WWF with input from insurers, regulators, and academic and financial experts, the report examines how climate and nature risks are reshaping insurance markets and outlines a roadmap for safeguarding households, businesses, and public finances.
Key findings highlighted in the report include:
- Surging uninsured losses: In 2024, global losses from natural disasters reached $318 billion, yet only about one third of these losses were insured. In the USA uninsured losses are rising in size and geographic reach as insurers retreat from high-risk areas.
- Risk to homeowners: Over 1.9 million home insurance policies have been non-renewed in the USA since 2018. States like California, Florida, and Louisiana have been the hardest hit, with some communities facing skyrocketing premiums or no coverage at all.
- Deepening protection gap: The share of uninsured homes in the USA has more than doubled, from 5% in 2019 to 12% in 2025, as rising climate risk and market dynamics combine to limit the private insurance sector’s ability to close this gap.
- Public budgets under strain: Without insurance, homes become un-mortgageable, property values plummet, and state budgets suffer. Government disaster relief spending in the USA exceeded $110 billion in 2024, diverting resources from long-term resilience investments.
- Nature can mitigate risk: Healthy ecosystems materially reduce flood, heat, and storm damages and can outperform engineered defences on a cost basis. However, these risk-reducing ecosystem services are rarely valued in loss estimates or integrated into insurance pricing, despite evidence that every $1 invested in climate resilience can save up to $13 in avoided losses.
The report calls for urgent action to invest in nature-based solutions that deliver cost-effective protections against extreme weather; the modernisation of insurance regulation with additional oversight and incentives for improving nature-based resilience; and an expansion of public-private partnerships for disaster coverage, tied to risk reduction measures.
