Rising Home Insurance Premiums: Profit or Climate Risk?

Home insurance premiums are increasing nationwide, with insurers citing climate-related disasters such as hurricanes and wildfires as contributing factors. However, a recent Pew Research Center survey indicates that most U.S. homeowners attribute rising costs to insurance companies' profit motives and the expenses linked to home repairs and rebuilds, rather than severe weather.

According to the survey, 71% of homeowners have observed higher insurance premiums recently. Among them, 65% believe that insurers' desire to increase profits is the primary reason, while only 46% consider extreme weather events a significant factor.

Gina Clausen Lozier, a partner at Clausen Choquette, explains that homeowners often feel dissatisfied when their insurance claims are denied or when they face high deductibles and limited coverage despite paying considerable premiums. This dissatisfaction is often understood as connected to insurers being publicly traded and feeling pressured to generate returns, influencing public perception of premium increases as profit-driven.

While public sentiment is skeptical, industry experts emphasize that premium hikes reflect a complex interplay of factors. Catastrophic events, such as the Palisades and Eaton fires in 2025, were responsible for a substantial share of global insured losses, according to Aon’s 2026 report. The growing frequency and severity of disasters are leading to increased insured losses due to hurricanes, floods, wildfires, and extreme heat.

The insurance industry is also grappling with soaring reinsurance costs, driven up by years of significant catastrophic losses. In certain states prone to disasters, some insurers have reported financial losses, reduced coverage offerings, or exited high-risk markets altogether. As a result, premium increases may affect homeowners even in regions not directly impacted by recent major disasters.

As premiums continue to rise, with 42% of surveyed homeowners reporting significant increases, the insurance industry faces challenges beyond merely addressing climate risk in pricing strategies. If homeowner skepticism highlighted in the Pew survey grows into distrust, it could alter the market landscape. Clausen Lozier notes that if the industry fails to maintain consumer trust, there could be a shift towards state-sponsored insurance programs or lender-placed insurance policies.

Lender-placed insurance, enforced by mortgage lenders when homeowners lack adequate coverage, tends to be more costly and offers less protection than traditional policies, as it primarily safeguards lenders' interests. Both state-backed programs and lender-placed policies provide limited coverage options, potentially heightening concerns about the reliability of the home insurance system.