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Working Toward a More Affordable and Resilient Path for Insurance Markets

Property insurance is critical for a functioning economy.

It helps families and businesses protect what is often their largest asset. It supports mortgage lending, helps communities recover after disasters, and gives homeowners and business owners greater confidence in times of uncertainty. When coverage becomes harder to find or afford, the impact reaches far beyond the insurance market.

In many parts of the country, insurance availability and affordability challenges reflect forces – economic, environmental and structural – that have been building for years and that now call for practical, shared solutions. 

Travelers is translating commitment into action – investing in resilience, standing with customers and partnering across the industry to chart a stronger path forward.

What is driving this challenge?

Insurance markets work best when products and pricing keep pace with changing risks. When they do not, consumers have fewer private-market options, more home and commercial property owners may be forced to turn to residual markets, and coverage becomes costlier and less dependable over time.

Home and commercial property insurance costs are being shaped by clear, compounding pressures:

  • Higher rebuilding and repair costs: Inflation has substantially increased the cost of labor and materials, making homes and buildings more expensive to repair or rebuild after a loss. From 2019 to 2024, residential reconstruction costs rose 44%, while labor costs rose 38.5%.1
  • More development in higher-risk areas: More properties are being built in places exposed to wildfire, flood and severe storm risk, increasing the concentration of potential loss. Between 1990 and 2020, population migration to higher-risk areas notably outpaced the general rate of population growth. While the overall U.S. population grew by 33%, in California’s high-risk wildfire zones, population surged 50%, and in high-risk hurricane zones along the Southeast coast, it climbed 57%.2
  • Lack of adequate building codes: According to FEMA, more than half of all jurisdictions across the United States continue to operate under outdated building codes. Research indicates that communities adopting modern codes could collectively avoid at least $32 billion in natural disaster losses.3
  • Aging infrastructure: A recent American Society of Civil Engineers report gave U.S. infrastructure an overall grade of C, with levees and roads earning a D+ and inland waterways a C-. The report noted that while resilience-focused upgrades carry up-front costs, they typically reduce long-term expenses by minimizing rebuilding needs after major weather events and disasters.4
  • More frequent and severe weather losses: Catastrophe losses occur more often and at greater cost. In 2024 alone, the United States experienced 27 weather and climate disasters, causing more than $1 billion in damage. Over the most recent five years, the annual average was 23 events, versus a long-term average of nine per year.5
  • Legal system abuse: According to the American Tort Reform Association, mass tort litigation and personal injury claims for auto accidents or falls in the United States cost $367.8 billion annually, or $1,666 per person and $5,215 per family.6 These lawsuits have become an industry and only about half of the payouts – 53 cents on the dollar – actually reach the injured parties.7
  • Insurance fraud: The Coalition Against Insurance Fraud estimates that insurance fraud in the United States costs about $308.6 billion annually, equating to roughly $900 per policyholder per year in premium increases.8
  • Outdated regulatory frameworks: In some areas, regulatory constraints prevent insurance products and premiums from being adjusted to reflect current risk – taking more than 300 days in certain states to approve rate filings. Over time, that can weaken market participation, reduce consumer choice and make coverage less available in the private market. 

Turning commitment into action

This challenge calls for sustained action to reduce risk, strengthen resilience and support a healthier insurance marketplace over the long term. 

A Travelers Institute symposium in New York City addresses the availability and affordability of P&C insurance.

That is the approach we are taking at Travelers, underpinned by foundational initiatives:

  • Investing in stronger homes and communities: We are investing in resilience where it can make a real difference. Through partnerships with Habitat for Humanity, Strongward, Smart Home America, Team Rubicon and IBHS, we have helped expand FORTIFIED construction and rebuilding practices. We have partnered with IBHS for more than 20 years to help advance research and building standards that strengthen homes, reduce avoidable losses and support resilient communities. In 2025, approximately 100 FORTIFIED homes for low-income families were built by Habitat for Humanity, Strongward and Rebuilding Together across the United States, made possible in part with funding from Travelers.
  • Standing with customers after disasters: In 2025, we handled more than 1.5 million claims and paid out more than $23 billion in losses, helping families, businesses and communities recover from some of their worst days. We responded to 62 catastrophe events and more than 80,000 catastrophe notices of loss in 2025, and 90% of those property catastrophe claims were closed within 30 days.
  • Addressing fraud head-on: Travelers Investigative Services provides end-to-end fraud detection capabilities, from policy inception through claim resolution. Our focus on early identification and detection combats both opportunistic individual fraud and sophisticated organized schemes. Our unique approach combines advanced detection technology with experienced investigators, allowing us to proactively and precisely identify suspicious claims and deliver measurable impact.
  • Convening the conversation: Through the Travelers Institute, we are bringing together policymakers, agents, brokers, carriers and consumers around a fact-based, solutions-oriented discussion of insurance availability and affordability. Through our Risk. Regulation. Resilience. Responsibility.SM series (pictured above), we are helping to elevate the issue and advance practical responses.
  • Bringing transparency to litigation financing: Litigation financing – external investors funding plaintiff lawyers to create and finance lawsuits – has exploded in recent years. We are working with state and federal policymakers to bring transparency to this opaque practice so that consumers are aware of the real-world cost increases it creates. (North Carolina recently outlawed a form of this litigation funding, and Congress is considering strong transparency legislation.)9
  • Celebrating the country’s 250th anniversary: Travelers Across America is a national initiative that we launched to celebrate America’s 250th anniversary by restoring and protecting historic landmarks across the country. It reflects our long-standing commitment to strengthening community resilience.

A stronger path forward

A well-functioning insurance market is essential to protecting families, businesses and communities, and sustaining that market requires both resilience and financial strength. The industry has paid out more than $4.4 trillion in claims in the United States over the past decade.10 

But this is also an industry where catastrophe losses can change the picture quickly, especially in markets already under strain. That is why we are working with others across the industry to improve market conditions, advance meaningful reform and invest in solutions that can reduce risk over time. 

Looking ahead, we believe progress depends on focus in four critical areas:

  • Creating the conditions for healthier insurance markets: Insurance works best when regulation is modern, transparent and responsive to today’s risks. That means allowing products, pricing and underwriting to reflect changing conditions, while helping consumers better understand the full cost of owning and protecting a home.
  • Advancing legal system reform: Lawsuit abuse and outsize jury awards drive up the cost of risk – and ultimately the cost of coverage – for consumers. States are beginning to make progress, with comprehensive tort reform packages enacted in Florida and Georgia and targeted measures advancing in states from Arkansas to South Carolina, addressing issues such as third-party litigation funding transparency, fair fault allocation and medical billing transparency. Sustained momentum on reforms like these can help restore balance to the civil justice system and ease pressure on insurance costs over time.
  • Investing in resilience before disasters happen: Stronger building codes, smarter land-use decisions, better infrastructure and practical mitigation support for homeowners can help reduce losses over time. Grants, financing tools and targeted incentives can make resilience upgrades more realistic and more accessible for families and communities.
  • Improving recovery and long-term protection: Homeowners need clearer pathways to recover after disasters and better access to solutions that support long-term protection, including flood risk education, efficient recovery systems and a more consistent framework across government programs, lenders and insurers.

Protecting homes and businesses means recognizing risk earlier and reducing it where we can, as well as building stronger partnerships among insurers, communities and government. Through our own initiatives, we are working to be part of that solution, forging the path to a healthier insurance marketplace – one that supports coverage that is more affordable, more available and more reliable over time. 

Sources
1 Verisk (2026): Why are insurance costs climbing? https://www.verisk.com/4920f3/siteassets/media/downloads/why-are-insurance-costs-climbing.pdf
2 U.S. Census Bureau
3FEMA (2026): Building Codes Save: A Nationwide Study of Loss Prevention, https://www.fema.gov/emergency-managers/risk-management/building-science/building-codes-save-study
4 American Society of Civil Engineers: 2025 Report Card for America’s Infrastructure, https://infrastructurereportcard.org/wp-content/uploads/2025/03/Executive-Summary-2025-Natl-IRC-WEB.pdf
5 National Centers for Environmental Information (2025): U.S. Billion-Dollar Weather and Climate Disasters, https://www.ncei.noaa.gov/access/billions/time-series
6 American Tort Reform Association (2025): Sanctionable, https://atra.org/fraud-on-the-rise-new-atra-report-exposes-systemic-lawsuit-abuse-in-civil-courts/
7 U.S. Chamber of Commerce’s Institute for Legal Reform (2022): Tort Costs in America: An Empirical Analysis of Costs and Compensation of the U.S. Tort System https://instituteforlegalreform.com/press-release/us-chamber-of-commerce-new-study-us-tort-system-costs-443-billion/
8 Coalition Against Insurance Fraud: Fraud Stats, https://insurancefraud.org/fraud-stats/
9 Litigation Funding Transparency Act of 2026
10 American Property Casualty Insurance Association via S&P Global Market Intelligence