Freedom Socialist newspaper, Vol. 47, No. 3, June-July 2026
By Dave Schmauch
As the effects of climate change intensify, those living in areas prone to extreme events are getting pounded. And not just by the weather.
U.S. insurance companies, which are supposed to assume the risk of home damage or loss, are instead leaving homeowners to fend for themselves. Wildfires, hurricanes, floods and hail storms are intensifying as the planet heats up, turning human lives into liabilities in the eyes of insurers.
And ecological disasters are becoming a regular occurrence, not just once in a lifetime events.
As a result, dozens of smaller companies in California, Florida, and Colorado have closed up shop because they are unable or unwilling to compensate victims of climate catastrophes.
Yet large corporations like Travelers, Chubb and State Farm are showing massive profits. In 2024, their CEOs received massive compensation of $23 million, $30 million, and $24 million respectively.
So how do insurers make a killing off a crisis?
To start, through complex and contradictory policy terms, they work hard to withhold compensation. When hailstones ripped through rooftops in Tulsa, Oklahoma, in 2024, State Farm ruthlessly denied claims and, in some cases, canceled policy holders’ coverage altogether, leading hundreds of residents to file lawsuits against the company. State Farm justified its actions by citing “coverage exclusions” that homeowners were never made aware of.
Big insurance also enjoys a cozy relationship with billions of taxpayer money. The National Flood Insurance Program (NFIP) is a federal program but private companies sell its policies and adjust claims. This generates hundreds of millions in profit subsidized by U.S. tax dollars.
Added to the complex web of private-public partnership is a practice called reinsurance. In this scheme, big companies pay “reinsurers” to take on risky policies in order to avoid making large pay outs when natural disasters hit. This protects profits in a wildly unpredictable climate-driven market, while homeowners pay the price as it causes premiums to skyrocket across the board.
As always, these predatory practices affect poor people, women, and people of color the most since they often lack the means to escape hazardous climate zones or are unable to pay exorbitant rates. As grocery bills and mortgage rates climb, many forego insurance altogether leaving themselves vulnerable when catastrophe strikes.
Congress has attempted minor reforms but they are easily sidestepped by corporate insurers. Instead of partnering with private companies, the government should make home insurance fully public and available to all by cutting these parasitic middlemen out of the equation and protect working-class homeowners.
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