This manufactured climate crisis has certainly thrown the regulators off the train of the high profits being enjoyed by the industry. Next time there is some sort of event that triggers large payments, the industry will benchmark its profitability decline off of the recent peak, not some normalized profit/return number. Great work Roger.
If the cumulative effect of 29 straight quarters of P/C rate increases was excessive, I would expect to see an uptrend trend in underwriting gain/loss. Since there is no such obvious trend in underwriting gain/loss, then the increases would appear to be roughly in line with requirements. The scatter around the annual gain/loss and the small number of years makes this analysis tricky, of course.
There is a good case to be made that the climate risk industrial complex finds its origin in the early 1990s. Following the Loma Prieta earthquake in 1989 and Hurricane Andrew in 1992, the insurance industry could no longer hide the fact that they did not understand how to price and calculate risk for catastrophic risks- earthquake (shake and fire following), wind, flood, and wildfire. Historically, the industry grossly under estimated the risk and cost associated with catastrophic events. The reasons for this are many...
1) Good analysis needs to be quite careful about "recent results," and I was glad to see the 6% ror average. While profits may be high/rising and seem like enormous numbers, the money the industry must put to work is also large. And it is cyclical; for every few good years, there will be bad years, and we need to take into account long time frames. Indeed, it is similar to trying to detect extreme weather incidence by only pointing to recent years. At a 6-7% ror, the insurance industry is not making much money. I would bet that 99% of homeowners in the US have had a better return on their investment than that.
3) I worry when people label things as "the name-something-you-disagree-with complex." One of the reasons I like THB is because it usually does a good job of steering clear of assuming negative intent and ad hominem attacks. I know and work with people on both extremes of the climate debate. The most partisan inevitably attribute base motives to the others side, and point to how they make their living (oil and gas on one side and climate advocacy on the other). But I know the people on both sides, and see the causation as backwards. Each sincerely believes they are engaged in a useful and positive engagement. They enjoy it so much that they made their living that way. Neither is a shill, and treating their ideas as inherently worthless -- though that may in fact be the case! -- is a problem. In this regard, everyone knows that the data and model results are inconsistent. the models and ratings are all over the place and confusing. But this is not a scam. It is smart people trying to assess a risk. I myself believe the risk is very overblown, but each person is trying to build a better mousetrap. And for what it's worth, the businesses have done rather poorly. Buyers do not really want to pay much.
3 ) in terms of insurance, the market will eventually price climate correctly, and government and advocates are unnecessary (at least in the long run). To the degree that losses actually show up, companies will suffer losses and will raise premia. If disasters do not show up, then they will make lots of money, which will attract competition, which will drive premia back down to the efficient level. As usual, Warren Buffett is correct.
"No matter if the science of global warming is all phony, climate change brings about the greatest opportunity to bring about justice and equality in the world," is a quote attributed to Christine Stewart, a former Canadian Minister of the Environment. I have no doubt Christine's motives are pure and I've seen similar sentiments expressed elsewhere among those in the climate activist community. I would like to think this sentiment rarely results in the crafting of "noble lies" but it’s a strong disincentive to challenge the activist consensus and for those in power it would very likely influence what sort of research is funded. I suspect similar disincentives exist whenever there's an economic conflict between seeking the truth and ones personal economic or even reputational well-being.
Great to see you highlight the profits being made by the insurance industry. Whilst here in New Zealand 2023 came with cyclone Gabrielle and Hale that devastated major urban areas, 2024 had no catastrophe for the whole Pacific. This, nor the hundreds of millions in profits from the local providers, was not newsworthy. I understand that the annual profitability broadly depends on one thing - did a category 5 hit Florida?
I also understand that in the early days of the Ipcc and the Cops, Greenpeace sought out the insurance industry as their corporate allies, successfully. It’s fascinating to hear how they really make their money. Thanks.
Will you explore the impact of NOAA disaster modeling and budget cuts on this topic? I know the industry is up in arms, but as I recall there are issues with the accuracy of disaster estimates from this source. Seems like this was providing on the one hand free data for the insurance climate modelers, and on the other hand cover for the insurance industry rate increases.
Unfortunately, I think we might be relying on state insurance commissioners' ability to look at a primary Property insurer's rate making models, dig into the cat models on which they rely, suss out the RCP8.5 equivalents, and deem them "excessive" (their mandate is effectively "not insufficient, not excessive").
Fortunately, the market's hand seems to keep loose boundaries on the excessive. One of the things your great article doesn't mention is that increasing commercial insurance rates act like rising oil prices. When rates get high enough, new capacity comes into the market, with their own models. Simply put, goes something like this:
After watching commercial Property rates go up single then double digit percentages for a few years, new capacity (insurers) come in to a market looking at the far right bar in your first graph. "If I underwrite (pick) good risks, cut their pricing 10%, I still make a ton of money." This is how it starts, every cycle, Property or Casualty. Almost a perfect analogy with oil.
You can see this at work in Florida's commercial property market. It's state surplus lines market (market of last resort, aka "non-admitted", not your Hartford, Travelers, Liberty Mutual, or Zurich, for example) office reported the following in its Nov. 2025 market report:
"Commercial Property remained the top coverage by premium at $207.4 million, though premium fell by 25% year-over-year. Policy count increased 19%, while the average cost per policy declined 37%, a clear indicator of ongoing softening as rate pressure eases and capacity expands".
So, even if the ability to flush out the RCP8.5-type Cat model high-end range damage "projections" eludes state insurance commissioners (bet on it), the economics of the market put something of an upward boundary on rates naturally.
But if the state regulators cap rates as they do here in California, there is effectively no free market. Non admitted carriers can come in and cherry pick the best risks. Many people here are going naked.
There was/is no reason for a "climate risk assessment industry" -- it is a bunch of financial vampires claiming to have climatological skill where none exists. A number of them have tried to sink their fangs into state regulators to require them to make the businesses under their purview produce meaningless reports on climate risk that will require (surprise!) the use of their useless industry.
Why buy insurance at all? Because the house is mortgaged, and the mortgage-holder demands insurance to cover the loan. How to break up this insurance racket? There was a quaint old custom called "living within one's means". Back in olden times people paid cash for their homes, and "self-insured" in that they themselves did whatever needed to be done to keep it habitable. Our grandfathers' houses were much smaller, much simpler, often built by the homeowners themselves. Nowadays almost no one does that, preferring, for some reason, debt bondage to banks and insurance companies so they can "afford" a big schooner of a house with all modern conveniences. Sad, really.
Sorry, I had to step away for a moment. The only alternative to the mortgage-and-insurance trap I've ever discovered was overseas work. When one works overseas, the vampire's kiss of government taxes is (or was, when I did it) greatly decreased, which allows a greatly increased savings rate. Took me ten years of saving, but working overseas allowed me to pay cash for a nice house when I returned stateside. If I were young, I'd look into the possibility.
Working overseas is a great gig for a bunch of reasons including the financial as you point out here. Although the financial incentives have been steadily eroding. My first assignment was in 1980 and my last one in 2004. Big difference in the money. Today, from what I have heard, it is even less of a factor.
One of the strengths of "The Honest Broker" substack is Pielke's mathematics and statistic's expertise. As a one-time math major, he has the background that few journalists, and even most climate scientist's lack. Thank you Roger!
Roger, would it be possible to validate the methodology of the various risk assessment vendors, perhaps by testing their methods applied to previous years, decades? Then regulators may have a better appreciation of their usefulness (or uselessnes).
Yes, this is what the Florida cat model commission actualy does. It is a lot of work and someone would have to pay for it. Model evaluation is tricky, at best. More to come on this . . .
Glad someone mentioned State Farm. In Florida they are managing risk in the extreme. They just write policies that are unlikely to have losses. I have been with them for over 20 years. Car, umbrella, home. Never had a claim with three hurricanes in my area in 04 & 05. I recently moved 10 miles away. Would not cover my home at any price or peril due to age. The house was totally remodeled, roof 10 years old and up to code. Now I am stuck with some no name company at very high rates. Have no idea if they can pay for a loss. How do we explain that, fraud losses? Many people are now going naked and I’m not speaking about how they dress.
I have a condo in Stuart. Many of my friends who have houses are, as you say, self insuring. One claims that six years of premiums equals the value of the house.
As Roger probably knows, in the forested areas of the mountains in Colorado homes are for sale because they cannot get insurance at any price due to forest fire risk.
It seems like there would be a market for flexible policies, such as where the homeowner picks up the first 100 or $200,000 in damage. Interesting times
Isn't a major reason the P/C insurers are doing so well this year that there have been no US hurricane strikes this year? The average is two hurricane strikes/year including one major one. But last year there were 5 hurricane strikes. How could the P/C insurers have done so well despite this?
Roger, the opening paragraph of the CFRF report you discuss says this: " While there is uncertainty over exactly how much physical risk we can expect over coming decades, it is indisputable that the frequency and severity of physical risk will continue to increase due to rising concentrations of anthropogenic greenhouse gas emissions. "
But isn't the whole point of the Table 12.12 in IPCC AR6 that it is disputable? If no signal of more frequent or more severe severe weather events has emerged or is expected to emerge this century, then there is no basis for saying that the frequency or severity of physical risk will increase this century either.
This manufactured climate crisis has certainly thrown the regulators off the train of the high profits being enjoyed by the industry. Next time there is some sort of event that triggers large payments, the industry will benchmark its profitability decline off of the recent peak, not some normalized profit/return number. Great work Roger.
If the cumulative effect of 29 straight quarters of P/C rate increases was excessive, I would expect to see an uptrend trend in underwriting gain/loss. Since there is no such obvious trend in underwriting gain/loss, then the increases would appear to be roughly in line with requirements. The scatter around the annual gain/loss and the small number of years makes this analysis tricky, of course.
Agreed👍
There is a good case to be made that the climate risk industrial complex finds its origin in the early 1990s. Following the Loma Prieta earthquake in 1989 and Hurricane Andrew in 1992, the insurance industry could no longer hide the fact that they did not understand how to price and calculate risk for catastrophic risks- earthquake (shake and fire following), wind, flood, and wildfire. Historically, the industry grossly under estimated the risk and cost associated with catastrophic events. The reasons for this are many...
These risk models are just another vector of the green grift to part us from our money.
They are therefore entirely fit for purpose, they provide the exact function they are supposed to.
Just another instance of decision-based evidence-making.
Three quick thoughts:
1) Good analysis needs to be quite careful about "recent results," and I was glad to see the 6% ror average. While profits may be high/rising and seem like enormous numbers, the money the industry must put to work is also large. And it is cyclical; for every few good years, there will be bad years, and we need to take into account long time frames. Indeed, it is similar to trying to detect extreme weather incidence by only pointing to recent years. At a 6-7% ror, the insurance industry is not making much money. I would bet that 99% of homeowners in the US have had a better return on their investment than that.
3) I worry when people label things as "the name-something-you-disagree-with complex." One of the reasons I like THB is because it usually does a good job of steering clear of assuming negative intent and ad hominem attacks. I know and work with people on both extremes of the climate debate. The most partisan inevitably attribute base motives to the others side, and point to how they make their living (oil and gas on one side and climate advocacy on the other). But I know the people on both sides, and see the causation as backwards. Each sincerely believes they are engaged in a useful and positive engagement. They enjoy it so much that they made their living that way. Neither is a shill, and treating their ideas as inherently worthless -- though that may in fact be the case! -- is a problem. In this regard, everyone knows that the data and model results are inconsistent. the models and ratings are all over the place and confusing. But this is not a scam. It is smart people trying to assess a risk. I myself believe the risk is very overblown, but each person is trying to build a better mousetrap. And for what it's worth, the businesses have done rather poorly. Buyers do not really want to pay much.
3 ) in terms of insurance, the market will eventually price climate correctly, and government and advocates are unnecessary (at least in the long run). To the degree that losses actually show up, companies will suffer losses and will raise premia. If disasters do not show up, then they will make lots of money, which will attract competition, which will drive premia back down to the efficient level. As usual, Warren Buffett is correct.
"No matter if the science of global warming is all phony, climate change brings about the greatest opportunity to bring about justice and equality in the world," is a quote attributed to Christine Stewart, a former Canadian Minister of the Environment. I have no doubt Christine's motives are pure and I've seen similar sentiments expressed elsewhere among those in the climate activist community. I would like to think this sentiment rarely results in the crafting of "noble lies" but it’s a strong disincentive to challenge the activist consensus and for those in power it would very likely influence what sort of research is funded. I suspect similar disincentives exist whenever there's an economic conflict between seeking the truth and ones personal economic or even reputational well-being.
Thanks
Good stuff
Pretty sure I stayed far away from invoking anyone’s motives or ad homs
The issue here is not that insurers are making money, that’s fine
The issue is that there has been a drumbeat of a climate-fueled insurance crisis and that is not true
Great to see you highlight the profits being made by the insurance industry. Whilst here in New Zealand 2023 came with cyclone Gabrielle and Hale that devastated major urban areas, 2024 had no catastrophe for the whole Pacific. This, nor the hundreds of millions in profits from the local providers, was not newsworthy. I understand that the annual profitability broadly depends on one thing - did a category 5 hit Florida?
I also understand that in the early days of the Ipcc and the Cops, Greenpeace sought out the insurance industry as their corporate allies, successfully. It’s fascinating to hear how they really make their money. Thanks.
"The virtuous veneer of climate advocacy serves to discourage scrutiny and accountability".
I think that is one of the most profound comments I have seen on this subject. Love it, Roger...did you steal it from somewhere else or is it yours :)
I should add, I am going to use it too!
It’s mine! And available for reuse!
Kudos!
Darn, follow the money strikes again!
Will you explore the impact of NOAA disaster modeling and budget cuts on this topic? I know the industry is up in arms, but as I recall there are issues with the accuracy of disaster estimates from this source. Seems like this was providing on the one hand free data for the insurance climate modelers, and on the other hand cover for the insurance industry rate increases.
Thanks for the article. Very informative.
Great post, Roger.
Unfortunately, I think we might be relying on state insurance commissioners' ability to look at a primary Property insurer's rate making models, dig into the cat models on which they rely, suss out the RCP8.5 equivalents, and deem them "excessive" (their mandate is effectively "not insufficient, not excessive").
Fortunately, the market's hand seems to keep loose boundaries on the excessive. One of the things your great article doesn't mention is that increasing commercial insurance rates act like rising oil prices. When rates get high enough, new capacity comes into the market, with their own models. Simply put, goes something like this:
After watching commercial Property rates go up single then double digit percentages for a few years, new capacity (insurers) come in to a market looking at the far right bar in your first graph. "If I underwrite (pick) good risks, cut their pricing 10%, I still make a ton of money." This is how it starts, every cycle, Property or Casualty. Almost a perfect analogy with oil.
You can see this at work in Florida's commercial property market. It's state surplus lines market (market of last resort, aka "non-admitted", not your Hartford, Travelers, Liberty Mutual, or Zurich, for example) office reported the following in its Nov. 2025 market report:
"Commercial Property remained the top coverage by premium at $207.4 million, though premium fell by 25% year-over-year. Policy count increased 19%, while the average cost per policy declined 37%, a clear indicator of ongoing softening as rate pressure eases and capacity expands".
So, even if the ability to flush out the RCP8.5-type Cat model high-end range damage "projections" eludes state insurance commissioners (bet on it), the economics of the market put something of an upward boundary on rates naturally.
But if the state regulators cap rates as they do here in California, there is effectively no free market. Non admitted carriers can come in and cherry pick the best risks. Many people here are going naked.
I wrote on this topic nearly 4 years ago and came to nearly identical conclusions: https://www.mikesmithenterprisesblog.com/2022/02/what-climate-emergency.html
There was/is no reason for a "climate risk assessment industry" -- it is a bunch of financial vampires claiming to have climatological skill where none exists. A number of them have tried to sink their fangs into state regulators to require them to make the businesses under their purview produce meaningless reports on climate risk that will require (surprise!) the use of their useless industry.
Why buy insurance at all? Because the house is mortgaged, and the mortgage-holder demands insurance to cover the loan. How to break up this insurance racket? There was a quaint old custom called "living within one's means". Back in olden times people paid cash for their homes, and "self-insured" in that they themselves did whatever needed to be done to keep it habitable. Our grandfathers' houses were much smaller, much simpler, often built by the homeowners themselves. Nowadays almost no one does that, preferring, for some reason, debt bondage to banks and insurance companies so they can "afford" a big schooner of a house with all modern conveniences. Sad, really.
Sorry, I had to step away for a moment. The only alternative to the mortgage-and-insurance trap I've ever discovered was overseas work. When one works overseas, the vampire's kiss of government taxes is (or was, when I did it) greatly decreased, which allows a greatly increased savings rate. Took me ten years of saving, but working overseas allowed me to pay cash for a nice house when I returned stateside. If I were young, I'd look into the possibility.
Working overseas is a great gig for a bunch of reasons including the financial as you point out here. Although the financial incentives have been steadily eroding. My first assignment was in 1980 and my last one in 2004. Big difference in the money. Today, from what I have heard, it is even less of a factor.
One of the strengths of "The Honest Broker" substack is Pielke's mathematics and statistic's expertise. As a one-time math major, he has the background that few journalists, and even most climate scientist's lack. Thank you Roger!
Lots of climate/insane have valid statistical skills, it’s the deliberate misuse of these skills that is the cause of all this ruckus.
Hiding declines, hiding data, merging datasets inappropriately.
It’s what climate alarmism is based on.
Roger, would it be possible to validate the methodology of the various risk assessment vendors, perhaps by testing their methods applied to previous years, decades? Then regulators may have a better appreciation of their usefulness (or uselessnes).
Yes, this is what the Florida cat model commission actualy does. It is a lot of work and someone would have to pay for it. Model evaluation is tricky, at best. More to come on this . . .
Glad someone mentioned State Farm. In Florida they are managing risk in the extreme. They just write policies that are unlikely to have losses. I have been with them for over 20 years. Car, umbrella, home. Never had a claim with three hurricanes in my area in 04 & 05. I recently moved 10 miles away. Would not cover my home at any price or peril due to age. The house was totally remodeled, roof 10 years old and up to code. Now I am stuck with some no name company at very high rates. Have no idea if they can pay for a loss. How do we explain that, fraud losses? Many people are now going naked and I’m not speaking about how they dress.
I have a condo in Stuart. Many of my friends who have houses are, as you say, self insuring. One claims that six years of premiums equals the value of the house.
As Roger probably knows, in the forested areas of the mountains in Colorado homes are for sale because they cannot get insurance at any price due to forest fire risk.
It seems like there would be a market for flexible policies, such as where the homeowner picks up the first 100 or $200,000 in damage. Interesting times
Interesting I live in Stuart in Willoughby.
Jim
Isn't a major reason the P/C insurers are doing so well this year that there have been no US hurricane strikes this year? The average is two hurricane strikes/year including one major one. But last year there were 5 hurricane strikes. How could the P/C insurers have done so well despite this?
That is a part of it, for sure, but as you can see from the data, the frst half of 2025 was exception, even with the CA fires.
Roger, the opening paragraph of the CFRF report you discuss says this: " While there is uncertainty over exactly how much physical risk we can expect over coming decades, it is indisputable that the frequency and severity of physical risk will continue to increase due to rising concentrations of anthropogenic greenhouse gas emissions. "
But isn't the whole point of the Table 12.12 in IPCC AR6 that it is disputable? If no signal of more frequent or more severe severe weather events has emerged or is expected to emerge this century, then there is no basis for saying that the frequency or severity of physical risk will increase this century either.
Agreed
The value of the CFRF report is not their opining on climate change but their truly excellent and quantitative look at the 13 vendors!
Fantastic study🔥