American homeowners are heading into peak hurricane and wildfire season with home insurance premiums at record highs, and a prolonged legal and political battle over FEMA's flagship disaster mitigation program is adding further uncertainty to a market that shows limited signs of stabilizing.
The average US home insurance premium is projected to rise 4% in 2026 to approximately $3,057, following a 12% increase in 2025, according to Insurify. Since 2021, premiums have climbed 46%, roughly three times the rate of general inflation. Insured losses from natural catastrophes in the US averaged $100 billion a year between 2023 and 2025, up from an annual average of around $15 billion a decade earlier, according to the Insurance Information Institute.
Against that backdrop, disruption to federal pre-disaster investment is drawing close attention from carriers, reinsurers and risk managers.
FEMA announced the termination of its Building Resilient Infrastructure and Communities program in April 2025, stating that approximately $882 million in congressionally appropriated funding would be returned to the Treasury or reapportioned. BRIC, created during the first Trump administration, funds infrastructure hardening projects including flood control systems, fire-resistant construction and levee improvements designed to reduce future disaster damage.
The cancellation halted roughly $3.6 billion in projects spanning several years of approved awards. Twenty states filed a lawsuit in July 2025. A federal judge ruled in December 2025 that the administration had unlawfully terminated the program and issued a permanent injunction. After FEMA failed to comply, the court issued an enforcement order in March 2026 requiring the agency to issue a new funding notice within 21 days. FEMA subsequently published a combined fiscal years 2024 to 2025 notice of funding opportunity with $1 billion available, with applications open until July 23, 2026.
The restored program comes with new restrictions. FEMA eliminated funding for hazard mitigation planning and non-financial technical assistance, changes that critics say will disadvantage smaller, under-resourced communities that depend on that support to develop shovel-ready projects.
FEMA's own research shows that every dollar spent on pre-disaster mitigation avoids approximately six dollars in future damage costs. For property carriers, that ratio has direct underwriting implications. When communities invest in flood barriers, fire-resistant building codes and drainage infrastructure, expected claims severity falls. When that investment stalls, the reverse is true, and the stall here has lasted more than a year.
That gap is opening at a particularly difficult moment for the market. Severe convective storms have emerged as the top peril for US home insurers, surpassing hurricanes and coastal flooding, with $42 billion in insured losses recorded by September 2025, a threshold exceeded for three consecutive years. The January 2025 Los Angeles wildfires, the most expensive non-hurricane natural disaster on record in the US, are driving projected 16% premium increases in California in 2026.
Availability, not just price, is increasingly the issue. Seven of the twelve largest insurers in California have limited new policies in the state since 2022. The California FAIR Plan, the state's insurer of last resort, had 140,000 policyholders in 2018; by June 2025 that figure had grown to over 610,000. The pattern is spreading. In Louisiana, an estimated 30 to 40% of mortgage loan applications fail because of high home insurance costs, according to a 2026 analysis by the Levy Economics Institute.
BRIC is not the only federal program creating market uncertainty. The National Flood Insurance Program is authorized only through September 30, 2026. Congress must reauthorize the NFIP by that date or the program, which covers nearly 4.6 million policies providing more than $1.3 trillion in coverage, will lose authority to sell or renew policies.
The NFIP lapsed for 43 days during the government shutdown in October and November 2025, stalling an estimated 1,300 home sales per day in flood-prone areas where federally backed lenders require flood insurance at closing. The program currently carries $22.5 billion in debt to the US Treasury, with $7.9 billion in remaining borrowing authority from a statutory ceiling of $30.4 billion. Long-term reform legislation has been introduced but not passed.
For property carriers and reinsurers, the simultaneous disruption of BRIC and the uncertain future of the NFIP creates a compounding risk management problem. Pre-disaster mitigation reduces tail exposure over a horizon of years. A gap in that investment now, during an active catastrophe environment, means claims consequences will appear in loss ratios before the mitigation work resumes its effect.
Federal Reserve Chair Jerome Powell warned Congress in February 2025 that within 10 to 15 years there would be "regions of the country where you can't get a mortgage" as insurance availability retreats from high-risk areas. The pace of that trajectory depends, in part, on whether federal mitigation investment is restored and sustained.
