Insurers Accused of Manipulating Climate Risk Models
A new industry memo alleges firms lower risk projections to protect short-term profitability and market share.
Updated on Oct. 20, 2026 in Insurance
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Insurance industry insiders in the UK and Europe claim that some companies are manipulating climate-risk forecasts to maintain profitability. This practice reportedly fuels higher premiums and reduced coverage, with nearly 40 million U.S. homes at risk of losing private insurance.
Why it matters
The memo suggests firms manage down risk data when projections threaten business incentives, potentially masking long-term dangers. This trend threatens to shift significant costs to homeowners through price hikes and non-renewals while undermining accurate risk assessment.
Inflation-adjusted homeowners premiums rose between 18% and 43% across four U.S. regions from 2018 to 2024. Additionally, studies correlate every 1-percentage-point increase in non-renewals with an 8.6% drop in local retail sales.
The players
Inside Track
This nonprofit organization published the Sounding the Alarm memo detailing concerns over insurance industry risk modeling.
Munich Re
A major global reinsurance group that, alongside Swiss Re, accounted for a quarter of the top 50 global reinsurance premiums in 2022.
Swiss Re
A leading provider of reinsurance and insurance products that maintains a significant portion of global market share.
California FAIR Plan
This state-mandated program acts as the insurer of last resort for property owners unable to obtain coverage in the private market.
The details
The report, titled Sounding the Alarm by the nonprofit Inside Track, alleges that insurers may request haircuts on forward-looking estimates to avoid displaying physical-risk projections. Insurers frequently respond to worsening physical risks by exiting regions or narrowing coverage, a trend that saw last-resort insurance use double in California, Florida, and Louisiana from 2018 to 2023.
Timeline
From 2018 to 2023, last-resort insurance usage doubled in California, Florida, and Louisiana.
Between 2018 and 2024, U.S. homeowners premiums increased by 18% to 43%.
In 2022, Munich Re and Swiss Re held 25% of global reinsurance premiums.
California approved new wildfire catastrophe modeling rules in December 2024.
California FAIR Plan enrollment grew by 43% between September 2024 and December 2025.
Market Dynamics
The controversy highlights the tension between regulatory efforts to modernize risk pricing and the industry's reliance on short-term profitability. This mirrors broader shifts in how financial institutions reconcile long-term physical climate exposure with immediate fiscal performance.
Homeowners may face continued upward pressure on premiums as insurers react to modeled risks, potentially leading to widespread non-renewals in high-hazard areas. Individuals should review their policy terms carefully to understand potential gaps in coverage or shifts in their provider's geographic risk appetite.
The takeaway
Consumers should be aware that insurance market volatility often stems from both physical risk changes and corporate modeling strategies. Evaluating alternative coverage options and understanding state-backed options is essential as market conditions evolve.
Further reading
For more context on how industry changes affect consumers, visit the Insurance section.
Source note: This article includes information reported by The Cool Down.
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