A memo from insurance industry insiders in the U.K. and Europe claims that some companies are exerting pressure on catastrophe modelers to alter climate-risk forecasts, potentially impacting business operations. This trend may also lead to higher premiums, reduced coverage, and an increase in non-renewal notices for American policyholders.
The findings are detailed in a report titled “Sounding the Alarm,” published by the U.K. nonprofit Inside Track. The memo was authored by current and former senior executives from the property-casualty, reinsurance, and broking sectors. It suggests that certain firms are seeking a “haircut” on forecast estimates, with the intent of minimizing the financial implications of significant physical-risk projections that could threaten profitability or market share.
Given that European entities provide a substantial portion of the capital for U.S. property insurance, the implications of these findings extend beyond Europe. Notably, Munich Re and Swiss Re accounted for approximately 25% of reinsurance premiums in 2022 among the world’s largest reinsurance groups, according to AM Best.
The memo outlines a common response within the industry to escalating physical risks, characterized by three sequential steps: increased prices, narrower coverage, and withdrawal from the most affected areas. This could result in consumers paying more for less protection or losing access to private insurance entirely.
Evidence of this trend can be observed in U.S. insurance data. The National Association of Insurance Commissioners reported that inflation-adjusted homeowners’ premiums rose between 18% and 43% across four regions from 2018 to 2024, with the most significant increases occurring in the last two years. In 2024 alone, insurers initiated over 2 million non-renewals, representing a 61% increase from the previous year.
As private insurers reduce their presence in high-risk areas, many consumers are left with fewer alternatives. For instance, enrollment in California’s FAIR Plan surged by 43% between September 2024 and December 2025, following devastating wildfires that destroyed approximately 12,000 homes. During the five-year period from 2018 to 2023, last-resort insurers in California, Florida, and Louisiana doubled their policy counts, while only about 4% of U.S. homeowners currently hold flood insurance.
The memo also argues that some insurers are relying on outdated or insufficient catastrophe models, which hampers their ability to accurately gauge aggregated risks. The authors advocate for pension funds and investors to scrutinize the short-term strategies of insurance carriers, stressing the need for a focus on risk reduction rather than merely adjusting prices or retreating from vulnerable regions.
In a move to address these concerns, California introduced regulations in December 2024 permitting insurers to utilize forward-looking wildfire models for rate-setting, on the condition that they write more policies in areas affected by wildfires and consider mitigation efforts undertaken by homeowners and communities. These new rules require public reviews of the models, with the first model passing review in 2025.
The memo concludes with a stark warning, stating that many policyholders today “may suddenly find that they are not our customers tomorrow.”
