Weekly Roundup: Shutdown Halts NFIP Adding To An Already Escalating Insurance Crisis
FOR IMMEDIATE RELEASE
October 3, 2025
Contact: contact@insurancefairnessproject.com
Weekly Roundup: Shutdown Halts NFIP Adding To An Already Escalating Insurance Crisis
Each week, the Insurance Fairness Project highlights the latest developments in the national climate-driven property insurance crisis. For more insurance updates, follow us on LinkedIn, X/Twitter, and Bluesky.
1/ NATIONAL FLOOD INSURANCE PROGRAM OFFICIALLY EXPIRES: The government shutdown before reauthorizing the National Flood Insurance Program (NFIP). The NFIP, administered by FEMA, covers more than 4.7 million Americans and is one of the clearest examples of how federal protections guard families against extreme weather while filling private insurance gaps.
Quote from the Insurance Fairness Project:
"When Congress slashes funding, communities pay the price and families across the country face higher costs and fewer insurance options, ” said Lizzy Price, a spokesperson for the Insurance Fairness Project. “The NFIP lapse adds fuel to an already escalating insurance crisis driven by climate change.”
Realtor.com: Congress Let the National Flood Insurance Program Expire—Here’s Who’s in Trouble First
Homeowners with active policies will still be covered until their expiration dates, and FEMA can continue processing claims as long as their funds last. And while many lenders are expected to suspend requirements for flood insurance until the program is renewed, new homebuyers, especially those in high-risk zones, may find themselves dangerously exposed if disaster strikes.
2/ NEW REPORT SHOWS WHY FAIR PLANS NEED A NEW DESIGN: Given the escalating extreme weather events, rising insurance costs, and the refusal of many insurance companies to renew or issue new policies, insurers of last resort (“FAIR Plans”) are increasingly becoming the sole property insurance option for homeowners and housing providers.
Climate and Community Institute (CCI): Insurers of Last Resort: Why Today’s FAIR Plans Need a Redesign to Address the Home Insurance Crisis
In the vast majority of FAIR and Beach/Wind Plans (at least 86 percent), insurance industry representatives control the majority of governing board seats, ensuring that these programs are run by and for the interest of industry, not the wellbeing of households and housing providers.
Affordable, adequate, and accessible insurance coverage is an issue of public concern, but insurance industry market failures have led to insurance gaps that harm households, communities, and local and state economies.
The last resort model is not optimal insurance design: This model concentrates risk rather than spreading and pooling across different types, levels, and geographies of risk. It also includes little to no effort at risk reduction, a key preventative aspect of good insurance policy design.
3/ HOW CLIMATE CHANGE IS MAKING HOME INSURANCE INCREASINGLY UNAFFORDABLE: The insurance industry is confronting a challenging future from its past underestimation of risks from climate-fueled natural disasters. The escalating costs associated with rising sea levels, severe rainstorms causing river swells, and large hailstones are straining insurers and disrupting housing markets.
Mother Jones: How a Warming Planet Has Made Home Insurance Increasingly Unaffordable
“The insurance crisis in the US is the canary in the coal mine, and the canary is dead,” said Dave Jones, the insurance commissioner of California from 2011-2018 and now director of the Climate Risk Initiative at the Center for Law, Energy and Environment at the University of California, Berkeley…. [ ]
Jones fears: “We are marching toward an uninsurable future in this country and across the globe; marching into the abyss.”
4/ FLORIDA UNDERWRITERS BANKED MASSIVE PROFITS WHILE STIFFING CUSTOMERS: New reporting dives into McKinsey & Co.’s role in reshaping insurance practices. The same playbook is driving today’s insurance crisis in Florida - a secret study revealed that Florida-based insurers funneled billions into profits and shareholder dividends, even as they claimed steep losses to justify rate hikes, dropped policies, and industry-friendly reforms.
Why this report matters:
Florida is one of the hardest-hit states in the national insurance crisis, which is being driven by the increase in extreme weather events. The average cost of insurance in Florida has risen 60% since 2019.Insurance companies are trying to influence state insurance reform across the U.S., which significantly impacts policyholders and the economy. Companies claim large losses and poor financial outlooks to justify rate hikes, dropped policies, and industry-friendly policy changes.
This is another example of the insurance industry privatizing gains while socializing losses.
This kind of behavior from insurers is not limited to Florida. Further examination is warranted in other states, and a Georgia state senator has already called for an investigation there.
The New Republic: How McKinsey and Climate Change Wrecked Insurance
5/ FLORIDA HOMEOWNERS HAVE LOST MORE THAN 90% OF CLAIM DISPUTES: Florida homeowners insured by Citizens, have lost over 90% of claim disputes since legislation two years ago diverted these cases from traditional courts. Policyholders consistently contribute to insurance plans expecting their claims will be honored during emergencies. It is imperative that legislators correct this flawed system and address the underlying causes of the insurance crisis, including climate change.
Newsweek: Florida Homeowners Are Losing Battle Over Denied Claims
"Any system where an insurer wins over 90 percent of the time is a system that ignores the well-being of homeowners,” Mekedas Belayneh, policy advocate at nonprofit consumer advocacy organization Public Citizen, told Newsweek.
Insurance Fairness Project spokesperson Lizzy Price told Newsweek that the process must be “rectified” as soon as possible. “Policyholders consistently pay into insurance plans, expecting their claims to be honored during emergencies. Legislators must rectify this flawed system and address the root causes of the insurance crisis, including climate change,” she said.
Resources
Insurance Fairness Project: Polling – Voters Want Their Government to Address the Property Insurance Crisis
Public Citizen and the Revolving Door Project: Mapping the Home Insurance Crisis
Consumer Federation of America: Overburdened: The Dramatic Increase in Homeowners Insurance Premiums and its Impacts on American Homeowners
Brookings Institution: Homeowners insurance in an era of climate change
Consumer Federation of America and Climate and Community Institute: Penalized: The Hidden Cost of Credit Score in Homeowners Insurance Premiums
Americans for Financial Reform and Public Citizen: Rising Property Insurance Premiums: The Uneven Risks to Household and Systemic Financial Stability
Climate and Community Institute (CCI): Insurers of Last Resort: Why Today’s FAIR Plans Need a Redesign to Address the Home Insurance Crisis
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The Insurance Fairness Project is an information hub dedicated to offering insights into the home insurance crisis, exploring its drivers and highlighting solutions alongside issue experts and community advocates.
