Climate Change & Nature Loss are Driving an Insurance Crisis

In this episode of Nature Breaking, you’ll hear from David Kuhn, WWF’s Director for Adaptation and Resilience Partnerships and a contributor to a new WWF report on the insurance crisis. David explains what’s driving the surge in uninsured losses, why premiums are skyrocketing, and how climate‑driven disasters are undermining the stability of the US insurance system. He also breaks down how nature loss is stripping communities of their “first line of defense” against floods, storms, and heat—and why restoring ecosystems may be one of the most cost‑effective ways to strengthen resilience and shore up the insurance system.

As David shares, there’s reason for hope in spite of these alarming trends. With smart policies, better risk modeling, and investments that treat nature as essential infrastructure, we can reduce damages, lower costs, and build a safer, more resilient future.

Links for More Info:

David Kuhn bio

REPORT: Tackling the Insurance Protection Gap

Op-Ed: Nature is a powerful ally against fires and floods (LA Times)

TRANSCRIPT:

Seth Larson: Why is World Wildlife Fund concerned about property insurance? Because nature loss and climate change are conspiring to push insurance markets to a breaking point. A new report from WWF warns that current trends could lead to a future where homeowners face skyrocketing premiums or worse, no access to insurance at all. But the report also offers hope, noting that conserving nature can reduce risk. Stay tuned to hear lots more about the report, including what it says that you as an individual can do to help.

Welcome to Nature Breaking, a podcast produced by World Wildlife Fund. I'm Seth Larson. Across the country, more and more people are finding it harder or impossible to get home insurance. Premiums are rising, major insurers are pulling out of high-risk areas, and families are being left financially exposed.

But behind these headlines is a bigger story about climate change, nature loss, and the growing "insurance protection gap." That's the widening difference between what disasters cost and what insurance actually covers.

A new global report from WWF warns that this gap is becoming a serious threat to communities and economies. And one of the key findings is that when ecosystems like wetlands, forests, and reefs are degraded, we lose a critical layer of natural protection.

Today I'm joined by David Kuhn, WWF's, Director for Adaptation and Resilience Partnerships who served as the lead contributor for WWF-US on this report. We'll talk about what's driving the crisis, how investing in nature can help close the gap and what governments, insurers, and communities can do to stay resilient.

Before we begin, don't forget to subscribe to Nature Breaking on YouTube, Spotify, Apple Podcasts, or wherever you listen. And if you have ideas for future topics, please email us at [email protected]. Now here's by conversation with David Kuhn.

All right. David Kuhn, welcome to Nature Breaking.

David: Yeah, thanks for having me, Seth. It's good to be here.

Seth Larson: Yeah, so this report is titled Tackling the Insurance Protection Gap, and I want to start right there. In my intro, I explained that the insurance protection gap essentially refers to the difference between what disasters cost on the one hand and what insurance is actually covering on the other. So what did your report find? How big is that gap now?

David: Yeah, so I think you hit on two things there in that definition that are worth parsing, right? So first is the cost of the disasters, as you mentioned. That first part has a pretty clear answer, the cost of disasters are exploding across the globe, right? Billion-dollar weather events and climate disasters in the US are pretty clearly increasing in frequency and magnitude.

Seth Larson: Yeah.

David: Back in the 1980s we were dealing with maybe three billion-dollar disasters per year in the US

Seth Larson: That's Three, three disasters that cost a billion dollars, each one.

David: That's right, that's right. And now we're dealing with over 20 per year. So from three to 20 in a span of 45 years. 2024 set of record. Or 2023, 2024 set some records with 27 and 28 events.

Seth Larson: Yep. Yep.

David: So that's a rate if you do the math, that's a rate of one billion-dollar event every 12 to 14 days on average. So can create a pretty serious strain on the economy.

Seth Larson: Yep.

David: And these events are driven by climate change and development. Infrastructure development in high-risk areas. Then if you think about what insurance does right it’s…

Seth Larson: Yeah.

David: …a financial safety net that supports households, businesses, infrastructure, other economic activities. But insurance can only do that... it can only be insurance if it can do three things. That's if insurers can price risk based on something that's predictable...

Seth Larson: Right.

David: ...in frequency and severity and calculate a loss from that. Two, diversify their exposure to avoid like a lot of claims, a lot of big claims at the same time. Three, set premium prices so people are actually buying policies so people can reasonably afford the insurance, right? Otherwise you don't have a sustainable business model.

Seth Larson: If the premiums are too high and people can't afford it, then what's the point?

David: That's right. Then no one's buying your product and you go out of business. So an insurance gap is created in order to kind of balance for those things when those conditions aren't met. When pooling risks break down or when payouts are consistently kind of exceeding premiums, or when premiums rise to a point that makes coverage unaffordable for the average consumer. Again, people aren't buying your policy. So the report that we did focused on the US, the EU, and Great Britain. We're talking about places where insurance penetration, private insurance penetration is generally and traditionally pretty high and just want to stress that the insurance gap is different for in, for developing countries and even within the countries that we're talking about, it's different within, there's a lot of heterogeneity in those markets. So...

Seth Larson: Okay.

David: Some places the gap is wider. And again, if you think about climate impacts, they're pretty localized and, government policy to try to narrow this gap is different in different places. To try to start to answer your question, the relative size of the global protection gap has been pretty stable, but the absolute uninsured losses are rising.

So in other words, the percentage of economic losses from natural catastrophes that aren't covered by insurance has remained pretty stable. But the important part, the cost, the absolute economic value, which is what matters to households, businesses, and governments who have to actually pay for those uninsured losses has increased on an average of between 6% and 10% annually, between 2015 and 2024.

Seth Larson: That's just insane.

David: A marked increase. Yeah.

Seth Larson: Yeah.

David: The US protection gap specifically is deepening in both size and geographical reach. And one kind of stark example, and again there were, there were great stats in this report that were pretty eye-opening for me. But in 2021, about 7.4% of the US population who owned homes didn't have homeowners’ insurance.

In 2024 that number almost doubled, and it went up to 13.4% of homeowners across the US didn't have homeowners’ insurance in 2024. So that's how we see it deepening. Insurance is becoming unprofitable in a number of US states, in something like 18 states. It varies year by year, but something like 18 states in 2024, homeowners’ insurance wasn't a profitable business. So that's just, it's an...

Seth Larson: Whoa...

David: unsustainable kind of business model.

Seth Larson: Yeah.

David: And beyond that, we're starting to see these new areas pop up. So you have those traditional states where you have high risk and high premiums, and but now you're thinking you have to start thinking about places like Massachusetts and like and these new hotspots where we haven't seen these sort of big climactic events before. And they're starting to creep into places where we never had to have the types of insurance that you have in say, Florida, or Louisiana.

Seth Larson: Yeah. This is all, it's scary hearing you download all this at once. But basically, I mean, what I'm hearing is like we're on a trajectory where the number of people without insurance is growing rapidly. The ability of homeowners to afford insurance coverage is getting harder and harder, and the ability of the insurance companies to derive a profit is getting harder and harder.

So looking forward, that's a bleak path that we're on and I'm sensing that like the undergirding of this whole system is starting to crumble a little bit here.

David: For sure, and you see that kind of reflected in the affordability of insurance too. You're seeing premiums just skyrocket across the board, I mean they... premiums rose on average of 38% between 2019 and 2024, which is...

Seth Larson: Is that right?

David: ...twice the rate of inflation. So it's out, it's outpacing inflation and if you look at some of these pockets, right? In Florida, retirees are spending over 34%, over a third of their retirement income on homeowner's insurance.

Seth Larson: Whoa.

David: In Louisiana, in the Orleans parish insurance is almost 30% of the average homeowner's total housing payments.

Seth Larson: Gosh.

David: These costs are that's one of the things that insurance companies are doing is they're pricing premiums based on this ever-growing risk, but it's becoming unaffordable for a lot of people. And I just want to talk about, we're not just talking about property insurance here, right? Climate litigation is on the rise and that kind of cascades into liability insurance and the wider insurance... system. Like the cost of doing business, business interruption is increasing and that's not insured. Agriculture, right? Climate and nature are driving agricultural losses, which puts a lot of pressure on an already really highly subsidized agricultural insurance system.

Seth Larson: Yep.

David: We're talking healthcare insurance. Again these high temperatures, if you can't work, you can't earn a living, or if you get sick because of certain event, insurance, we're seeing this impact health insurance. Increasing mortality, decreasing productivity in the workforce. And what's really scary about this paper, not to scare you even more than you're already scared, but we realized that these are lower bound estimates, right? We didn't, what's being reflected in any of these in the costs and the damages and what's uninsured is the destruction of nature or the loss of income. All of these sort of secondary impacts from climate change and all these big extreme weather events.

Seth Larson: So you touched on this a little bit, or you've certainly alluded already about some of the practical effects that this trajectory can have for everyday consumers, for homeowners, for people who want to buy a home someday. But can you, can we drill down a little bit more into what this means for people who, I know you just mentioned health insurance. I think primarily we're talking today about the housing and business insurance industry, property insurance. Can you talk a little bit more about some of the practical effects that people are already seeing or that might, people might be seeing in the near future if this all continues apace?

David: Sure. I think you know, in a nutshell, not insurable is not investible. So when something isn't insured or when a market has spotty insurance coverage, properties are devalued due to greater risk, right? So there's...

Seth Larson: Yep.

David: ...downward pressure on prices and market confidence. Property owners in high climate risk US states are already seeing the significant reduction in the price of their homes following insurance non-renewal. Uninsured... uninsurable properties are no longer accepted as collateral for a loan, right? There's some real practical impacts of this that we're already starting to see. Most commercial loans, private loans, investments require insurance as an underlying asset. So what's non insurable is not investible. Then you talk about the increasing costs of insurance or uninsured losses, and that's a real... it makes mortgages harder to pay back, increasing the risk of default when you have to clean up after a disaster. We talked about the retirees in Florida. You have less disposable income, when have to pay more for insurance. Without insurance disasters can destroy wealth like, because home equity for many people is their main source of wealth.

Seth Larson: Yep.

David: You either have to use savings or take on debt to meet costs. And there's a story from Hurricane Katrina where it flooded most of New Orleans and 200,000 homes were impacted right? Total property damage there was around the neighborhood of a hundred billion dollars and the National...

Seth Larson: Wow.

David: ...Flood Insurance Program only covered 10% of those losses. So families in the poorest areas of that city had to pay thousands of dollars out of pocket to repair their homes, even after government help.

Seth Larson: Yep.

David: That slowed recovery and that stripped families of what would have been this generational wealth where they handed down their homes and their savings to their kids and they paid for college. And this is happening even in the absence of kind of an extreme event, where there's physical damage. They're these steep, you see these steep declines in the value of homes because they're uninsurable.

Seth Larson: Yep.

David: In the, that's like the household. The personal kind of side of this problem. Then the public sector, they're the ones that have to pick up the slack. So governments are the insurers of last resort.

Seth Larson: Yep.

David: The United States spent almost a hundred, like $1 trillion on disaster recovery in 12 months back in 2024, 2025, and when losses from extreme weather start to pile up, and those losses need to be absorbed by public budgets, government debt levels become increasingly concerning, right? Rising insurance costs, disaster-recovery spending fuel inflation, reduce disposable incomes for households and businesses. They curtail consumer spending and investment and access to credit. So it's a real, it's a real issue, it's one of those foundations of our economy and our society and it's flashing bright red warning signs right now.

Seth Larson: Yeah, absolutely. And I mean I'm no expert on the housing market, but I'm aware enough of the news cycle that housing affordability is already a huge cause for concern. It's one of the leading things on people's minds that you read about in the news nowadays. And I think there's like a whole generation of Gen Z-ers out there wondering if they're ever gonna be able to afford a home.

And then you stack this insurance cost affordability on top of the already skyrocketing cost of just buying a house to begin with and it just really makes it feel almost impossible for a whole universe of people to think about the prospect of home ownership, or property ownership period. Which is really scary and pretty sad. So I know you have some solutions that can bring some hope into this conversation and we'll get to that in a minute. But before we do, we've talked a lot about climate change so far. Obviously that's a huge part of all of this. Your report also focuses a lot on the role that nature plays here and the role that nature loss is having in contributing to this insurance gap.

So I wanted to ask you to talk a little bit more about that and what your colleagues and yourself found on the nature loss front.

David: Yeah, it's what, it's one of the novel things about this report, right? Climate change and nature degradation, nature loss are part and parcel.

Seth Larson: Yeah.

David: Intact ecosystems serve as buffers against these extreme events. They... robust and healthy ecosystems provide a range of resilience benefits to people, and we know what those are, right.

Forests help slow the pace of water movement and that kind of reduces the risk of extreme flooding that retains water. Forests help retain water for drier episodes. Coastal ecosystems like mangroves, coral reefs, they act as kind of these natural barriers against storm surges and coastal flooding.

And we have numbers to kind of calculate how much that's worth, right? Coastal wetlands in the US are estimated to provide like $23 billion in storm protection services every year.

Seth Larson: Yep.

David: Oyster reefs, the list goes on, right? You have, and inland, you have forests and vegetations and vegetation that kind of stabilize slopes. So we know that nature has value here. What remains striking is how little of this conversation focuses on prevention, right? Nature's...

Seth Larson: yeah.

David: ...protective value rarely, if ever, appears on financial risk models, insurance pricing, infrastructure planning. So in many cases we know nature outperforms that traditional infrastructure. And I know you talked to Ryan the other week on the infrastructure topic, right? Nature outperforms traditional infrastructure oftentimes at a fraction of the cost. Public spending continues to prioritize response, cleaning up afterwards over resilience. Doing... building up these systems so that we are resilient to next extreme weather event. So we rebuild homes and not wetlands, right? We strengthen our infrastructure and our levies, but we don't strengthen our floodplains, right? We're under-investing in nature and that's something that really came out pretty starkly in this report. And there are reasons for that, right? There's no, there are no accounting methodologies for the impacts of nature loss. Insurance underwriters don't have or aren't using the data collection, the modeling tools that are focused on like the efficiency of resilience measures. So we, I think what's more nobody thinks about the impacts of climate change on nature itself. So...

Seth Larson: Yeah.

David: ...damage to nature by climate change is often completely overlooked. So all these wonderful things that we get from nature, we rely on nature in this case for its like protective services, but nature needs help too. So we've done a really good job over the past say, century of stripping nature of its resilience, right?

We've fragmented it, we've shrunk it, we've degraded it, we've stripped it of its biodiversity, and therein its own means of adapting to climate change. So when nature's not protected or restored before or after damage, that like stock of natural capital of ecosystem services that we rely on to protect us from these things is stripped. And we can no longer reap the benefits of nature. So you know, what we found is that there's a real, there's an under accounting and an underinvestment in nature in this space. And those two, and again climate impacts in nature go hand in need to be looked at in the same vein.

Seth Larson: Yeah. I want to give our listeners sort of a break from the doom and gloom and shift towards talking about some of the things we can do to avoid this sort of bleak future we've painted a picture of. And I know one thing that's covered in the report is that basically, like, if there's a positive from the findings about nature loss and how they're contributing to this spiraling insurance gap, it's that the problems that re caused by nature loss can also be addressed by conserving and restoring nature, right?

So I wanted to ask what the report recommends about basically how nature can be an ally in addressing this insurance crisis and what we should be doing proactively.

David: Yeah, proactively is the right word there, right? We... the longer we wait to build resilience, the more expensive it's gonna be and the impacts are just gonna grow the longer we wait. For all the doom and gloom, I think that we're seeding urgency here. So this all means we need to treat nature as a core economic infrastructure. I'm sure Ryan said the same.

Seth Larson: Yeah.

David: Just like roads, bridges, power grids, right? We need to put it, we need to value it in its rightful place for all that it does for us. So we have to account for the benefits we get from nature in risk assessments, financial planning. We need to direct climate and disaster funding towards restoring nature as a risk reduction measure and not just focus on response. we need to align incentives there too. So we reward risk reduction, rather than just repeatedly underwriting exposure, which we're doing now.

Seth Larson: Yeah.

David: Prevention is cheaper than recovery. Every dollar that we invest in resilience, I've seen lots of estimates, but it can save multiple dollars and avoided losses.

Seth Larson: We need to start investing again, the benefits are there, there's a lot we can do. You're right, I think the issue is that nature is a public good. So who's responsible for doing it is a question that we also try to answer in this paper. And it's not just gonna be one silver bullet or one actor that does it, but we all again need to put nature at the forefront of our solution set.

Yeah. And so you talked a lot there about what we need to do. Who's the we here? Because WWF isn't gonna solve this problem for the country or for the world. So what kinds of it, what kinds of entities are we talking about? I imagine governments have a huge role to play, maybe companies, insurers, and changing the way they think about this stuff. Who should be taking what actions, when and how?

David: Yeah. Yeah. So the report focuses mostly on government interventions and, insurance interventions. Because they have a lot of leverage, right? Everybody can do something and everybody should start thinking about this too. But I think governments really need to start facing these realities and thinking more holistically and into the future.

So everything that we've been talking about needs to be reflected in policy because governments, again are having to pick up the slack and be insurers of last resort and clean up after disasters. So first, policy makers really need to take what's called a precautionary approach, which means take a prevention approach, right?

It's a "better safe than sorry" approach. Just do some scenario planning. This like range of plausible futures when it comes to managing climate environmental risks, and then you can start to do some analysis, but stop destroying things that you are probably gonna want to rely on in the future, right?

Seth Larson: Yeah.

David: Governance, governments really need to expand what they think about and what they think of as risk and resilience and need to take steps to ensure insurance firms are doing the same thing and they're properly understanding their risks and they're doing the right accounting. And you can do things like mandate climate and nature risk disclosures both for insurers and businesses.

The paper outlines again, a lot of different recommendations that companies, governments can take in order to start acting on this insurance gap. I can go into detail on any one of them, but there are quite a few because this is the systemic, holistic kind of problem and it needs a very innovative and a very all of society solution set.

Seth Larson: Yeah. I won't make you go through all of them, but pull out what, if you were the Czar of fixing this problem for a day, what would be like the one or two solutions that you would say, these are the things that I would prioritize and let's get 'em done.

David: Yeah, I if I was a policymaker and as boring as this sounds, I think that it all starts with pricing natural capital and ecosystem services in our macroeconomic models. Reflecting what we have currently and what we need in something like GDP, right? Or incorporating ecosystem services into natural catastrophe models. That's like this crucial prerequisite for a lot of helpful actions.

Seth Larson: Interesting. So, ba...

David: ...the...

Seth Larson: So putting, capturing the value of nature and these ecosystems in GDP, so that we're, when we're losing those things, it's easier to calculate those losses as well and respond accordingly. It's gonna send the right incentives, right?

David: Yeah, once you have the right math, a decent sense of what the real risk is and what your real options are to mitigate that risk, we can do things like update zoning laws to protect critical ecosystems. Part of the reason that we're spending massive amounts of money and the development of infrastructure in these at-risk locations is that insurance prices aren't actuarily fair in many locations, right? It's making development of nature, paving over some of these ecosystems seem like a good idea when it might not be. One, I think once we stop treating nature like this big public good that is inexhaustible and we start to really take a look at value of nature to our society writ large, I think the better we'll be at coming up with the right solutions.

Seth Larson: Yeah. David, I want to ask, as you are thinking about this report and all the work that you and your colleagues put into it, is there something from the report or from the direction that it points towards, that leaves you feeling hopeful amid all this, the grim statistics.

David: Yeah, I, we did, part of part of the research that we did for this report was to go out and try to find, again understand the magnitude of that gap in different places. So we did a lot of research on what's going on across the country and these different continents to understand what policies are working. And who is doing this investing in nature and valuing nature, and you come up with, there's some action on a lot of these fronts. So it's not this, like this problem that doesn't have a solution. It's not this problem that isn't being worked on. It is, and it's, and we are encouraging more action and more holistic thinking on it.

But there are definitely bright spots in what I've seen in writing this paper and doing this research. South Carolina established this like upper peninsula zoning district, Charleston, which was designed to encourage investment in areas less likely to experience flooding.

Right. Boston, Massachusetts created this like coastal flood resilience overlay district. And they got a lot of people get together to try to understand what the real risk was, what was valuable to people in order to put these maps together. You have targeted state level grants and incentives that are out there.

South Carolina, again. There are a lot of like grant mechanisms and planning going on to try to get a handle on this. It's not all doom and gloom and I think that there's definite kind of reason for hope.

Seth Larson: David, any parting thoughts for our listeners before I let you go?

David: As a listener or as just like a homeowner, I think there's some practical steps that you can take here. You need to know what your policy is and what you need from your policy, and then you can start asking questions of your policy holder. Let them know that this is important for you, right? Do some research on what's available to you in the form of government backed policies and, where your insurance maybe doesn't cover an emerging or worsening risk. And then I have this great story of a colleague of ours at WWF who took that next step, and he lives up in Vermont and his property was flooded during one of these big storms. And he took it upon himself to install some berms, some nature-based solutions on his own property to mitigate the damage of the next flooding event, and he went to his insurance company and had a discussion with them about his premiums because he took that action and invested money in a nature-based solution on his property.

Seth Larson: Nice.

David: So are things that we can do as individuals. I don't want to put the onus, obviously, on us again, because this is a big problem where there are a lot of actors and a lot of powerful, powerful actors that are going to need to sit up take note and do something different than what we've been doing in the past. So yeah, my message would be to start to take action and educate ourselves. And start to demand things out of our insurance companies and our governments and keep hope.

Seth Larson: Great. David, thank you so much for your time today. This is, it's a really complicated and thorny topic, but really important and something that, as complicated as it is, it touches down in the lives of millions and billions of people. Whether you're a homeowner now or you want to be in the future, this stuff really matters to all of us.

So thank you for all the work that you and your colleagues put into illuminating this topic and giving average folks like myself some concrete steps that we can think about taking. And thank you for spending time talking about it today.

David: Yeah. You're not average Seth, but you're welcome.

Seth Larson: Thanks, David.

David: Yep.

Seth Larson: Thanks again to David for joining the show. The effects of climate change and nature loss on property insurance are really complicated, but really important. If you own a home or plan to own a home someday, this stuff really matters. David gave all of us some great ideas for how we can take action and explained how individual actions fit into the bigger picture of structural and policy changes that need to happen to keep insurance markets stable. I definitely learned a lot from this episode. I hope you did too, thank you for listening and together let's keep building a more sustainable future.