Natural disasters in the United States are becoming more frequent, severe, and expensive. Many homeowners are now facing skyrocketing insurance premiums, stricter underwriting requirements, or a complete lack of coverage options. These changes are already affecting employee relocation decisions, as insurance costs become a bigger factor in where people can afford to live.
In this Q&A, Connie Pearson, director of domestic services at NEI Global Relocation, shares how the insurance market is shifting in response to climate risks, what long-term changes may be on the horizon, and how mobility professionals can support transferees during this volatile period. Additionally, John Habanek, head of corporate mortgage solutions and homebuilder relations for Chase Home Lending, shares a lender’s perspective on how insurance challenges are impacting the homebuying and financing process, especially in high-risk regions.
How have recent natural disasters impacted homeowners’ ability to secure and maintain insurance coverage?
Pearson: Catastrophes are a key driver: from wildfires in California and the West to hurricanes in Florida and the South, wind and hail in Colorado and the Midwest, and flooding in Vermont and the Northeast. Americans in the most disaster-prone ZIP codes in recent years pay 82% higher premiums than those in low-risk areas, per a report from the U.S. Treasury Department. Florida, California, and other states also have faced regular insurance crises as multiple insurers have declared insolvency, nonrenewed policies, or left the states entirely. Reports from this year show further increases are likely, but states prone to frequent natural disasters may experience higher adjustments. There is some potential good news as several carriers started re-entering restricted states toward the end of 2024. Some of that appears to be driven by state regulators approving price increases and by moderating inflation.
Habanek: Recent natural disasters have significantly impacted homeowners’ ability to secure and maintain insurance coverage. Insurers have tightened underwriting standards and raised premiums in high-risk areas, limiting access to affordable options. We encourage homeowners to start the insurance process early, conduct thorough research, and leverage the expertise of their real estate agents and lender to address any issues that may arise.
What trends are emerging in how insurers assess risk and set premiums in disaster-prone areas?
Pearson: Insurers are increasingly relying on predictive analytics and geospatial modeling to assess risk more precisely. In high-risk areas, premiums have surged significantly due to climate-related disasters and rising rebuilding costs. For instance, home insurance premiums jumped by 23.7% for renewals in 2023, with states like South Carolina, Texas, and California seeing the highest increases. Additionally, many insurers are raising deductibles—policies with $2,000-$2,500 deductibles have risen by nearly 200% since 2019 to offset rising claims costs. The same article notes that 79% of mortgage lenders saw increased problems with home insurance and 68% saw issues related to debt-to-income ratios. Some insurers also require additional inspections for older homes before coverage approval.
In some markets, the additional inspection requirements are beginning to impact home sale programs. Some clients may consider adding those inspections to their up-front process to protect the company from the cost of required repairs or the risk of buyers being unable to obtain coverage.
Habanek: Insurers now leverage advanced data analytics and climate modeling to assess risk more accurately in disaster-prone areas. In some cases, this approach has led to more personalized premium structures, where rates depend on specific geographic and environmental factors. Homeowners may experience more variability in insurance costs based on their location and associated risks. Additionally, homeowners should consider proactively engaging with insurers to understand these trends to make informed decisions about their coverage.
How are insurance companies adapting their policies in response to increasing claims from natural disasters?
Pearson: To manage growing claims, insurers are tightening underwriting standards, reducing policy offerings in high-risk areas, and requiring separate deductibles for certain perils. For example, many policies now include mandatory wind/hail deductibles, typically set at 1% of the home’s insured value. Furthermore, many carriers are leaving high-risk markets like California and Florida due to rising wildfire and hurricane claims.
Are you seeing insurers introduce new coverage options or restrictions in high-risk regions?
Pearson: Yes, many insurers are reducing or eliminating coverage in disaster-prone areas while introducing alternative policies. Some now require additional riders for flood and wildfire coverage, while others offer usage-based insurance, which adjusts premiums based on risk factors like home improvements and location-specific hazards.
Meanwhile, microinsurance policies are gaining traction, making coverage more accessible in high-risk areas (U.S. Risk, 2024). Even in the Midwest, insurance premiums have increased exponentially. Although the storm damage doesn’t often make national news, Nebraska insurance rates increased by nearly 23% in 2024.
Habanek: In some cases, yes, insurers introduce both new coverage options and restrictions in high-risk regions. Some insurance companies offer specialized disaster coverage, while others implement exclusions for specific perils. We advise homeowners to review their policies early in the process and communicate with their real estate agents as well as their lenders to address any potential coverage gaps.
What role do state-backed insurance pools play, and are they a sustainable solution as natural disasters become more frequent?
Pearson: Reinsurance, a practice where insurers purchase coverage from other companies to share the financial risk of large losses, has become more expensive due to increased payouts for natural disasters. As an example, in Florida, specialty insurers dominate the state’s residential market and rely on reinsurance to cover nearly 40% of the properties. In contrast, in Georgia, national insurance carriers play a bigger role and rely on reinsurers for less than 10% of properties. This can explain why inflation-adjusted premiums in coastal counties of northeast Florida rose by about $1,000 between 2018 and 2023, while nearby counties in coastal Georgia increased by less than $500.
Habanek: State-backed insurance pools can provide crucial coverage options for homeowners who might otherwise struggle to secure insurance in the private market. However, as natural disasters become more frequent, the industry is seeing a strain on these types of solutions. We encourage homeowners who might use these funds amid a natural disaster to become familiar with the programs and how they might apply for relief if needed.
How are relocation and mobility professionals helping homeowners and transferees navigate rising insurance costs due to climate risks?
Pearson: Employees may have been hit with high, unexpected premium spikes, which could lead to increased financial pressure and/or refusal of company relocation offers. Offering resources to navigate insurance markets/options can improve the relocation experience. With client consent, relocation/mobility professionals could encourage employees to invest in risk-reduction improvements, such as energy-efficient upgrades or fire-resistant materials, which may lower premiums and increase property values. Additionally, up-front counseling about the challenges of obtaining insurance can help employees be better prepared for the home purchase process and less likely to leave that research to the last minute.
It’s important for mobility professionals and transferring employees to understand how raising the policy deductible may impact annual premiums. Ask if an insurance agent can help identify any unknown discounts so the employee doesn’t have to switch insurance companies. Compare quotes across providers to be cost-effective. Direct employees to resources or brokers who specialize in competitive insurance quotes. Seek out experienced insurance brokers who can access different options. Many insurers offer discounts for bundling multiple policies (like home, life, and auto) or installing security and monitoring systems like smoke detectors and water sensors. These measures lower risks and insurance costs. Corporate clients could explore company partnerships with insurance providers or adding vetted insurance offering to their internal affinity programs. Directing transferring employees to those resources may help companies save money and manage risks. Partnerships may offer special discounts or create custom insurance plans designed to handle specific challenges, helping businesses address rising costs more effectively.
Addressing the rising homeowner insurance costs issue can increase employee relocation offer acceptance and also help relocating employees understand the situation in a new location. This can help strengthen the employer as an interested, trusted partner in their employees’ well-being and finances.
On the sales side, insurance is impacting how companies manage inspections for home sale programs. In Florida, for example, an insurance inspection is increasingly common, and coverage may be declined if the roof is over a certain age, regardless of condition. Some employers are considering adding an insurance inspection to their Guaranteed Buyout or Buyer Value Option protocols.
Habanek: Relocation and mobility professionals play a vital role in helping homeowners and transferees understand and navigate rising insurance costs. They can provide valuable insights into regional risks and insurance options, enabling homeowners to make informed decisions about their coverage needs. Their expertise is particularly beneficial in high-risk areas where insurance costs significantly impact relocation decisions.
Are more homeowners opting to go without insurance, and what risks does that pose in disaster-prone areas?
Pearson: Yes. A study from the Insurance Information Institute found 12% of Americans today no longer have home insurance, up from 5% in 2019—the highest level of uninsured homeowners the industry-funded research group has seen. Many of these either own their homes outright and didn’t renew their policies after satisfying the mortgage, or did not find another policy when the one they had was not renewed.
The proportion of uninsured owners rose in some major metro areas, especially in Miami, where 21.2% of homeowners went without insurance in 2023, up from 14.5% in 2021. NEI does not recommend forgoing insurance, as homeowners would be gambling that a catastrophe won’t occur, especially with most people’s net worth tied up in their homes. Also, because lenders typically require homeowners insurance on a property, if a homeowner fails to maintain homeowners insurance, a lender can purchase force-placed insurance on their behalf, which is usually more expensive than a regular policy and protects a lender’s interest.
Habanek: Homeowners should be aware that when financing a home, homeowners’ insurance is typically a requirement, unless the lender offers specific exceptions. While homeowners may consider going without insurance due to rising costs, this decision poses significant risks, particularly in disaster-prone areas. Without insurance, homeowners may face substantial financial losses in the event of a disaster. We urge homeowners to carefully weigh the risks and benefits, conduct thorough research, and ensure they have adequate coverage.
What long-term changes do you anticipate in the home insurance market as climate risks intensify?
Pearson: Going forward, insurers will likely continue raising premiums and tightening underwriting guidelines. There will also be a greater push for public-private partnerships to address climate-related losses, such as expanding federally backed insurance programs. At the same time, technological advancements in risk modeling may allow for more customized pricing in the future. Yet, without major regulatory or industry shifts, some regions may face an affordability crisis, making homeownership more challenging.
Anything else you would like to add?
Pearson: While home insurance costs may not have been a significant consideration for employees contemplating relocation in the past, employers may soon discover that it is becoming an increasing concern. With inflation and rising costs top of mind for many, employees relocating to higher-premium areas—or seeking to move away to avoid them—may soon base their decisions on more than just salary and benefits.
Rising material costs and labor shortages are also impacting insurance rates as it’s increasingly costly to rebuild homes destroyed by disasters. With new tariffs on China, Canada and Mexico, top providers of building material imports to the U.S., those impacts are expected to grow. Companies should remind transferees to check their coverage limits to ensure coverage is sufficient to rebuild under current conditions.