This is a guest blog co-authored by Risalat Khan, Senior Strategist, Insurance and Finance at The Sunrise Project Inc and Kenny Stancil, Deputy Research Director at the Revolving Door Project. If you’ve opened an insurance bill lately and felt your stomach drop, you’re not alone. For many of us, insurance is a core part of the financial safety net, but the cost of insuring our homes, our cars, our farms, and our health is climbing fast. Insurance companies blame rising ‘natural’ disaster losses and rebuilding costs, but they’re leaving out a crucial part of the story: Fossil fuel pollution, which insurers continue to support (through practices like underwriting and investment), is supercharging the extreme weather that is driving up insurance prices. We call it the pollution premium — the hidden surcharge that fossil fuels add to the cost of protecting the things we care about most. In early 2024, the Global Week of Action (GWA) called on the insurance industry to end their role in driving the climate crisis through their insurance of fossil fuel projects. This action was in Nigeria by Voices of the Vulnerable on 29 Feb 2024. Photo: Voices of the Vulnerable Climate disasters are getting more expensive The costs of the climate crisis are rising, for the insured or uninsured alike. In 2024, global economic losses from tropical cyclones, floods, wildfires, and other extreme weather events made worse by planet-heating emissions reached USD 368 billion, well above the 21st century average. Only $145 billion of those $368 billion in losses were insured. The remaining $223 billion landed directly on families, communities, and governments with little safety net and grueling paths to recovery. This massive protection gap serves as a reminder that across much of the world, the costs of the climate crisis fall directly on people without insurance. Behind those numbers are real human beings. Typhoon Yagi killed 816 people and caused $12.9 billion in losses across China and Southeast Asia. Hurricane Helene killed 243 people and caused $75 billion in losses across the US, Mexico, and Cuba. Spain’s flash floods in Valencia killed 231 people and caused $16.1 billion in damage. Of the $104 billion in damages unleashed by those three storms, just $22.1 billion was insured. That leaves households and government budgets to absorb the rest. In a changed climate, nothing is just a random act of nature anymore. Estimates suggest that over a third of all weather-related insured losses since 2000 — roughly $600 billion — may have been caused by climate change. The climate share of losses rose from 31% to 38% over the past decade, growing at 6.5% per year — faster than the growth in overall insured losses. Even people with insurance are not spared. As climate disasters become more frequent and intense, insurers face more and more claims. To stay profitable, they raise premiums — the regular payments you make to stay covered. This is the extra amount that fossil fuel-driven climate change quietly adds to your insurance bill every month regardless of where you live. The pollution premium, in other words, is escalating for all of us. Activists protesting against insurance companies investing in fossil fuels. Photo: Leon Kunstenaar Premiums are rising around the world As climate disasters grow more costly, we can see the impact in how insurance companies charge policyholders across the world. In the United States, homeowner insurance premiums increased by 29% from January 2021 to January 2026, and personal auto insurance rose nearly 25% over the same period. These mounting costs are among the biggest contributors to overall inflation. France raised its mandatory natural catastrophe surcharge on property insurance from 12% to 20%, effective January 2025. In northern Australia, premiums climbed more than 130% in real terms between 2007 and 2022, a 6% growth year on year. Across most low- and middle-income countries, insurance coverage is usually less than 10%, and sometimes far less, leaving uninsured communities and businesses to bear most of the risks and losses from climate disasters. This is a global problem. And it’s getting worse. Insurers are dropping out, leaving ordinary people to pick up the tab Insurance companies aren’t just raising premiums; they’re abandoning some communities altogether. In the United States, nearly two million home insurance policies were not renewed between 2018 and 2023, and the national average nonrenewal rate increased by 32%. Some of the biggest insurers have stopped writing new policies altogether in certain places in recent years, citing extreme weather risks, including Allstate and State Farm in California, Farmers in Florida, and AIG in parts of more than a dozen states in the US. Across much of the world, the situation is even bleaker. In Asia, only 17% of losses from climate disasters are covered by insurance and in Latin America, the rate is just 19%. In Africa, only 0.5% of climate-related losses had insurance coverage — leaving hundreds of millions of people entirely exposed when floods, droughts, and storms destroy their homes and harvests. When there is no insurance safety net, the costs land directly on families and governments, and sometimes a major disaster can cost an entire year’s GDP for a small country! For communities accustomed to higher rates of insurance protection, the retreat of private insurers forces governments to step in as the insurer of last resort. In the US, these emergency backup programs have more than doubled since 2018 and now cover more than $1 trillion worth of property. Not only are there concerns about their ability to pay out claims in the event of major catastrophe, the costs are passed onto the public in the form of higher premiums. People left without affordable options face hard choices. Some turn to smaller or less regulated insurers — companies that may not be able to pay out when disaster actually strikes. Others simply go without insurance entirely. In 2024, 6.1 million US households had no home insurance at all. In Europe, only around a quarter of weather-related losses are insured. Across Asia and Latin America, it is less than one in five. Either way, ordinary people are left exposed and paying into a system that may not protect them, or taking on all the risk themselves. The pattern is the same everywhere: as fossil fuel pollution turbocharges climate disasters, insurance becomes less affordable, less available, and less reliable. But when insurance disappears, the costs don’t. They land on strained families, communities, and government budgets instead. Local climate activists, working with the Insure Our Future Network, gathered outside AIG Headquarters in Manhattan on May 12, 2021 during their annual shareholders meeting to demand that AIG take action on climate change. Photo: by Erik McGregor They knew. We’re paying. None of this is happening by surprise. As far back as the late 1970s, ExxonMobil’s own scientists accurately predicted the warming we’re now experiencing. The fossil fuel industry knew that its products cause planet-wrecking pollution, but spent decades funding doubt and delay instead. The insurance industry also knew. As early as 1973, Munich Re warned about climate change impacts. Yet most insurance companies continue to insure and invest in fossil fuel expansion regardless, even though we have known since 2021 that such expansion is incompatible with limiting temperature rise to 1.5°C, beyond which destructive impacts grow exponentially worse. As of 2024, just 32 companies were linked to over half of global fossil fuel emissions. Meanwhile, fossil fuel subsidies reached USD 7.4 trillion the same year. Put simply, governments are subsidizing the industry most responsible for unleashing climate chaos and forcing households to pay for the ensuing damages. And the costs keep growing: beyond insurance, fossil fuels are driving up healthcare costs through air pollution, pushing up food prices through supply chain disruptions, and adding billions to public health budgets through heatwaves, vector-borne diseases, and more. The fossil fuel industry profits while we pay the pollution premium. This is a political choice — and we can change it Here’s the good news: the solutions exist, they are affordable, and the public wants them. We can bring down the pollution premium by replacing fossil fuels with clean energy and making polluters pay. Make polluters pay. Every premium hike, every dropped policy, every government bailout is a cost that belongs on the balance sheets of the companies that caused this crisis. New York’s Climate Change Superfund Act is designed to collect $75 billion over 25 years from major oil and gas companies — money that goes directly back to communities bearing the costs of extreme weather. And the public is ready: 71% of US voters support requiring fossil fuel companies to pay their share of climate damages. Globally, 8 in 10 people agree. Expand cheap renewable energy. In 2024, 91% of newly built renewable capacity produced electricity at a lower cost than the cheapest new fossil fuel alternative. The benefits are substantial; renewables helped avoid $467 billion in fossil fuel costs in 2024, supporting energy security, affordability, and resilience. Build resilience. In Alabama, homes constructed to wind-resistant ‘Fortified’ standards filed 55% to 74% fewer claims after Hurricane Sally. If every affected home in two counties had met those standards, insurers could have saved $112 million on payouts and policyholders $35 million in deductibles. We can prepare before a disaster strikes. But pursuing resilience without decarbonization is like running on a treadmill that keeps speeding up. Real risk reduction requires adapting to climate change and reducing emissions. We don’t have to keep paying the pollution premium. Governments can end fossil fuel subsidies, tax polluters, and accelerate the shift to clean, affordable renewable energy. The money is there. The technology is there. The public support is there. What’s missing is political will — and that’s something we can build together. It’s an open question whether the insurance industry will become an ally in this fight or continue to prop up fossil fuels. Insurance companies and executives are still profiting from the status quo. Offloading liabilities while raising premiums — and investing our premiums into dirty industries — is padding their bottom line. The climate crisis is treated as someone else’s problem. Yet, there is precedent: health insurers took tobacco companies to court in the 1990s, and today, property insurers have the option of doing the same with the fossil fuel industry. Ultimately, our political representatives must safeguard our communities by making fossil fuel polluters pay, and forcing insurers to become part of the solution. The post Out of Pocket: Pollution Premiums – the real cost of fossil fuels on our insurance bills appeared first on 350.