Research shows there’s a considerable challenge hiding in plain sight across the US insurance industry. While 97% of insurers now disclose climate-related strategies, fewer than 30% actually provide measurable targets or concrete metrics. This isn't just a paperwork issue - it's a crisis of accountability that's leaving customers vulnerable and businesses unprepared.
The latest data from Ceres, a non for-profit advocacy organisation, reveals a stark disconnect. It highlights that “99% of insurers reported on risk management processes, 97% on strategy, 87% on governance, but only 29% disclosed metrics and targets related to climate risks” (Ceres: 2025 progress report, climate risk reporting in the US insurance sector).
The timing couldn't be worse. In 2024 alone, 27-billion-dollar weather disasters caused $182.7 billion in damages, whilst the global protection gap is projected to continue to rise 5% to $1.86 trillion throughout the remainder of 2025. The difference between what people need covered and what insurers actually cover is growing at breakneck speed.
What this means for customers
This disclosure gap has real consequences for policyholders who are making critical decisions about their coverage.
Without concrete metrics, customers can't evaluate whether their insurer is accurately prepared for climate risks. Are rate increases justified by improved risk modeling, or are they disguised profit enhancements? Customers deserve to know.
Research shows that the problem could potentially get worse as insurers consider whether they should restrict coverage or exit markets entirely. During May 2024, there were 11 Florida home insurance companies in liquidation, while major insurers including AAA, Farmers and Progressive rolled back coverage availability in Florida (Bank rate: Home insurance crisis: First Florida, now California). As of early September 2025, QBE Insurance announced they were pulling out of the U.S. home insurance market completely, leaving around 37,000 California customers to find new coverage over the next 12 months. The insurer told the California Department of Insurance it's choosing to "narrow its market focus rather than continue operating in what's become an increasingly challenging market”(The insurer: QBE to drop 37,000 policies in California). Builders Reciprocal Insurance Exchange (BRIE) has stepped forward to take over most of QBE's policies as part of the transition.
How can customers make informed decisions about their protection when some insurers won't share their risk assessment criteria? Without transparency into how insurers evaluate price climate risks, policyholders are essentially buying coverage blind, unable to compare which companies are genuinely prepared for future weather events versus those simply raising rates without adequate justification.
The regulatory response
State insurance commissioners aren't sitting idle. They're moving from requests to requirements. The NAIC Climate Risk Disclosure Survey has narrowed it’s expected response time from insurers. The survey which was issued in July 2025 expected responses to be provided by August 2025. This marks a significant shift, what started as voluntary best practices is now becoming mandatory compliance. Insurers who fail to provide adequate climate risk disclosures could face regulatory scrutiny, market access restrictions, or challenges getting rate increases approved.
The survey follows the Task Force on Climate-Related Financial Disclosures (TCFD) framework, which focuses on four key areas: governance, strategy, risk management, and metrics and targets. The last category is where most insurers are failing.
The challenge for insurers
Many insurers are still figuring out how to measure climate risk effectively. Traditional actuarial models rely on historical data, but climate change has made the past a poor predictor of the future.
There's also competitive pressure. Insurers worry that revealing too much about their risk models could give competitors an advantage or spook investors about their exposure levels.
But some critics see these excuses as unnecessary. Only 29% of insurance companies reported their metrics and targets in 2024, which Ceres noted was "an urgent concern" considering the billions of dollars in damage from extreme weather events that occurred last year (Ceres: 2025 progress report, climate risk reporting in the US insurance sector).
What insurers need to do
Experts suggest a more cohesive and thorough approach is needed, outlining the following recommendations:
Insurers need to standardize their climate risk metrics –This means agreeing on common definitions and measurement approaches across the industry. The NAIC's Catastrophe Modeling Center of Excellence is a good start, but adoption needs to accelerate.
Transparency must become the default – insurers should publish annual climate risk assessments that include specific metrics about their exposure levels, risk mitigation strategies, and performance against targets.
Regulators need to enforce meaningful consequences – Disclosure requirements without consequences are just suggestions. State insurance commissioners should link market access and rate approval authority to meaningful climate disclosure compliance.
Taking action
As Ceres highlights, "insurers must move beyond rhetoric and invest in real climate accountability." The disclosure gap isn't just about compliance, it's about whether the insurance industry can fulfil its fundamental promise to provide protection when customers need it most.
The climate crisis won’t wait for insurers to improve their disclosure practices. Every hurricane season, wildfire season, and extreme weather event that passes without proper risk measurement and transparency makes the eventual reckoning more severe.
Customers need insurers to explain what risks they face, but also how they're preparing to handle them. The 29% metric gap needs to close, and it needs to close fast.
The question isn't whether climate disclosure requirements will continue to evolve, they inevitably will as regulators respond to growing stakeholder demands for transparency. The real question is whether insurers will proactively embrace comprehensive disclosure as a competitive advantage, or find themselves playing catch-up when enhanced regulatory standards become unavoidable.
If you’d like more information on the US insurance market or guidance on recruiting the best talent in the market don’t hesitate to contact one of our insurance consultants.
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