A new report from World Wildlife Fund, Tackling The Insurance Protection Gap, warns that the rising frequency and severity of extreme weather is driving an insurance crisis in the United States, leaving millions of households and businesses financially exposed.
“The insurance protection gap is the canary in the coal mine for the U.S. economy, and it’s a warning rooted in the loss of nature’s protective systems. When ecosystems are degraded, communities lose their first line of defense against extreme weather. By restoring and valuing nature’s ability to protect people and property, we can strengthen community resilience and public budgets.” – Marcene Mitchell, SVP of Climate Change, WWF-US
Addressing the widening insurance protection gap – defined as the difference between total economic losses and insured losses of major extreme weather events – requires investing in the nature-based solutions that deliver cost-effective protection against floods, heat, and storms. Taking nature into account when creating disaster risk reduction and resilience strategies can both reduce the impact of severe weather events and aid in response and recovery efforts, but these benefits are not often accounted for by insurance underwriters or governments, the report finds.
“The insurance protection gap leaves people vulnerable as extreme weather events hit people hard. With over half of climate-related losses uninsured globally – and more than 90 percent in developing countries – this is no longer just an insurance market issue, but a systemic threat to people’s livelihoods, economic resilience and even financial and fiscal stability.” – Laurence Tubiana, Special Envoy to Europe for COP30
Key Findings
- Uninsured Losses Are Surging: In 2024, global losses from natural disasters reached $318 billion, yet only about one-third of these losses were insured. In the U.S., uninsured losses are rising in size and geographic reach as insurers retreat from high-risk areas.
- Homeowners at Risk: Over 1.9 million home insurance policies have been non-renewed in the U.S. since 2018. States like California, Florida, and Louisiana have been the hardest hit, with some communities facing skyrocketing premiums or no coverage at all.
- Protection Gap Deepens: The share of uninsured homes in the U.S. has more than doubled—from 5% in 2019 to 12% in 2025—as the 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. Disaster relief spending by the U.S. government 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 defenses on a cost basis. However, these riskreducing 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.
Why It Matters
Unlike many climate impacts, insurance risk is repriced and renewed annually, allowing climate risk to hit housing and real estate markets abruptly and long before homes are physically damaged or lost. In highvalue coastal markets such as South Florida, where insurance is essential for mortgages, a loss of coverage can freeze sales, depress property values, and trigger broader economic decline.
The report calls for urgent action to:
- Invest in nature-based solutions that deliver cost-effective protection against floods, heat, and storms.
- Modernize insurance regulation with additional oversight and incentives for improving nature’s resilience.
- Expand public-private partnerships for disaster coverage, tied to risk reduction measures.
About the Report
The white paper, developed by WWF with input from insurers, regulators, and academic and financial experts, examines how climate and nature risks are reshaping insurance markets and outlines a roadmap for safeguarding households, businesses, and public finances.