Insurance in Retreat: Climate Change Leaves Minnesotans Exposed

A climate-driven crisis requires urgent insurance reforms.

Data visualization provided by Kenny Stancil, Revolving Door Project

Outside a recent national gathering of insurance regulators in Minneapolis, Public Citizen and a group of Minnesotans gathered in protest. With a demand for stronger action from regulators, the demonstration called attention to the growing threat from climate change to insurance and housing markets.

From metro suburbs to rural towns, homeowners across Minnesota are grappling with steep insurance rates, limited coverage, and escalating cancellations. Unlike coastal states, the risks stem from increasingly severe hailstorms, wind events, winter damage, and inflation, yet the result is the same: a shrinking insurance safety net.

Minnesota was previously lauded as a potential “climate haven,” with Duluth earning the title of “climate-proof Duluth.” However, even before the 2024 hail season, counties like Hennepin and Dakota were already seeing clear signs of escalating climate stress. Now, 2025 data confirms the crisis is deepening statewide.

Data published by the Federal Insurance Office (FIO) suggests a strong link between climate change and rising insurance costs. Households in the top 20% most climate‑exposed ZIP codes paid 82% higher premiums and experienced about 80% higher nonrenewal rates than those in the lowest‑risk areas. In Minnesota, data on premiums show that rural areas are particularly exposed to rising costs.

Minnesota insurers are quietly withdrawing.

Between 2016 and 2023, the Minneapolis Fed documented a 39% cumulative increase in premiums, an increase that far outpaces inflation. According to Insurify, Minnesota homeowners can expect their insurance rates to increase an additional 15% by the end of 2025, one of the sharpest projected hikes nationwide. The average monthly premium is expected to rise from about $294 in 2024 to $338—roughly a $44 increase—or over $500 per year. 

With mounting risks, access to comprehensive, affordable insurance is shrinking. From Minneapolis to Mankato, insurers are quietly withdrawing from high-risk zones, raising rates, or canceling policies altogether. Minnesota doesn’t currently require insurance companies to report nonrenewals by ZIP code publicly. This lack of transparency leaves homeowners in the dark, unable to anticipate or challenge coverage changes.

Another troubling trend? 

Surveillance-based underwriting is on the rise. Insurance companies are increasingly using aerial imagery to inspect roofs, as well as yards and structures, sometimes flagging “issues” that result in canceled or non-renewed policies. These practices could disproportionately impact older homes and those unable to afford immediate repairs. 

These surveillance tactics are unfolding against a backdrop of rising climate-related losses. In 2017, a north metro hailstorm caused over $3 billion in damage—one of the most expensive weather disasters in Minnesota history.

The result?  

Higher premiums and a growing reliance on automated tools to justify non-renewals, leaving many homeowners, especially those in older or modest homes, vulnerable to sudden loss of coverage without recourse.

Policyholders are paying the price for climate change.

The consequences of rising costs are severe, particularly for seniors on fixed incomes, first-time and low-income homeowners, and rural residents with fewer insurance options. Property insurance premiums in 2024 were double those of 2021. Some ZIP codes report nonrenewal rates approaching 30%, meaning nearly one in three families have to search for new home coverage with just 60 days notice. For those who are dropped due to their roof’s age, this provides little time for an expensive repair or upgrade.

Renters will also face higher costs. As costs rise sharply for affordable housing providers, they will pass on higher coverage costs. The Minneapolis Fed found that multifamily housing providers saw an average 45% increase in premiums and a 700% increase in deductibles over the just three years.

Minnesota’s experience offers an important lesson: even states with no coastline are not immune to climate risk. Climate adaptation and consumer protection are essential. And without rapid action now to mitigate climate change, home insurance may become a luxury product—available only to the wealthy or those living in the safest neighborhoods.

Proposed reforms have not kept pace with the crisis.

In early 2025, Minnesota lawmakers introduced several bills to rein in rising rates and promote transparency:

• Senate Bill 1643 would require regulators to approve any rate hike over 10%.
• House Bill 1576 proposed grants for retrofitting homes damaged by hail and wind.
• A third bill aimed to mandate ZIP-code-level reporting for nonrenewals.

All three failed to pass, facing heavy opposition from industry groups. Minnesota also continues to use a “file-and-use” system, meaning insurers can raise rates first and justify them later.

To keep insurance affordable, a new home insurance taskforce should proactively pursue both climate adaptation and mitigation to reduce the risk, while strengthening consumer protections. 

Insurance reforms must protect the public and reduce climate risks.

A new Minnesota home insurance taskforce should recommend the following actions:

Strengthen public oversight

• Establish a public intervenor program for insurance regulations, similar to Minnesota’s Public Utilities Commission intervenor program.
• Establish a public database to monitor insurance affordability, availability and adequacy, similar to the Home Mortgage Disclosure Act.
• Require insurers to provide a copy of any aerial images to homeowners and extend non-renewal periods to one year to allow for home upgrades

Accelerate climate adaptation

• Follow Alabama in collecting fees or surcharges for the insurance industry to fund resilience retrofits, prioritizing outreach to and grants to low-income households and disadvantaged communities. 
• Enhance building codes by giving municipalities the power to enact building standards that are more, and not less, restrictive than the state code.

Mitigate the physical and financial risks of climate change

• Require state-licensed insurers to annually file plans and document progress on aligning their underwriting and investments with the state’s net-zero emissions goals.
• Follow Connecticut and New York in publishing guidance on integrating climate change into the supervision of insurance companies.

To see how the home insurance crisis in your state, click here to explore an interactive national map.

The author thanks Carly Fabian and Rick Morris for their edits and conversations.