The new gold rush? How to unlock the 'uninsurable' market

A new gold rush is on the horizon, but it’s not for precious metals or oil. It’s for data, and it promises to unlock a massive, untapped market: the millions of properties deemed "uninsurable."

For years, property and casualty (P&C) insurers have been in full retreat from high-risk regions, pulling out of states and canceling policies at an alarming rate due to escalating environment-related losses. This exodus has left a massive market gap and a growing number of communities without adequate coverage.

The scale of this problem is staggering. In California, the state-run insurer of last resort, the FAIR Plan, has swelled to more than 452,000 policies, a stark indicator of the private market’s contraction. This is not just a California problem. From the coastal communities of Florida, where premiums have skyrocketed, to the flash flood-prone interior of the country, a crisis of insurability is taking hold.

The consensus has been that these markets are simply too risky. But what if that consensus is based on incomplete information? What if the risks aren’t unmanageable, but simply mismeasured? This is where the new gold rush begins. For carriers with the right tools, this seemingly uninsurable market isn’t a liability; it's the next great opportunity.‍

The old model is broken

The current crisis facing the insurance market is a direct result of relying on outdated methods and flawed assumptions. Traditional underwriting has always been a backward-looking discipline, relying on historical data and broad, generalized risk assessments that fail to capture the true, evolving nature of environmental change; for example:  

• Interdependent risks: The old model treats natural hazards as isolated events. In reality, they are interconnected in a dangerous and compounding cycle. In California, for example, two consecutive wet winters created the vegetation growth that fueled the devastating 2025 Los Angeles wildfires, which caused $40 billion in insured losses. Now, the burned areas lack vegetation to absorb water, leaving them acutely vulnerable to catastrophic floods. This cycle of fire to flood is a hidden variable that traditional models simply cannot see.
• Increasing risk in the Wildland-Urban Interface (WUI): The vast majority of wildfires occur in the Wildland-Urban Interface (WUI), the transitional area between wildlands and developed communities. With approximately 45 million U.S. residences in this zone, a problem that was once considered regional is now a mainstream risk. The average fire size has tripled over the past 30 years, and this growing intensity and size is creating a crisis of insurability.
• The flaws of historical data: The past is no longer a reliable predictor of the future. The Central Texas flash floods in July 2025 were a 1,000-year rainfall event that caused $1.1 billion in property damage, devastating communities that were considered "safe" by traditional flood maps. Similarly, the million-acre Smokehouse Creek Fire in Texas in February 2024 demonstrates that while the number of fires may decline, their increasing intensity and size create more property damage than ever before.

Traditional underwriting, blind to these compounding and escalating risks, has left carriers with a simple but costly conclusion: retreat. But as they pull out, they are leaving millions of homeowners and businesses with little to no coverage. This is the crisis, but this is also the opportunity.

A new framework for underwriting

The key to unlocking the 'uninsurable' market is not to assume all risk is equal. It’s to use precision data to reveal the true, hyper-local risk profile of every single property. This is where Cotality’s Climate Risk Analytics (CRA) comes in. We believe that true resilience begins with consistent, granular data that can quantify potential losses for multiple environment-driven perils across a variety of environmental scenarios.

We call this "Intelligence beyond bounds" because our platform moves beyond outdated, broad-stroke models to provide address-level insights. This allows us to see around every corner of a property’s risk profile. Our Climate-Coupled-Catastrophe Models™ (C3 Models™) and AI-powered platform provide the foresight needed to confidently re-enter high-risk markets by:

• Pinpointing hidden vulnerabilities: Our analysis of the 2025 Los Angeles fires revealed that 75% of properties within the Eaton fire perimeter, initially rated as low-to-moderate wildfire hazard, had a high conflagration risk. Traditional models missed this. Our data-driven approach uncovers these crucial details, giving underwriters the information they need to accurately assess a property.
• Looking forward, not backward: Our models don't just tell you about past risk; they project future risk based on best-in-class climate science. We integrate IPCC climate scenarios to assess the impacts of environmental change on a property in 30 years, not just today. For example, Cotality research has estimated a potential loss of $7.9 billion in property value for Miami homeowners due to flood risk under a severe environment scenario. This forward-looking approach allows carriers to price for long-term risk with confidence.
• Uncovering interdependent risks: Our data understands that risks are not siloed. We identify and quantify the interdependencies of different perils, such as the wildfire-to-flood risk cycle in California. This gives insurers a more holistic view of a property's total risk exposure, empowering them to make better-informed decisions.

The road to profitability

With Cotality's CRA, the future of underwriting looks radically different from the past. Insurers are no longer forced to make a binary decision: insurable or uninsurable. Instead, they have a new, data-driven framework that turns environmental risk from a liability into a new revenue stream, thanks to:

1. Accurate, risk-based pricing: Our Composite Risk Score (CRS), which combines over 20 detailed risk measures into a single metric, allows carriers to move away from broad, fear-based pricing and towards precise, risk-based pricing. This unlocks the ability to offer policies in regions previously deemed too risky, such as the top 15 U.S. metro areas for wildfire exposure, which are all in the West and have seen their Reconstruction Cost Value (RCV) for high-risk homes dramatically increase since 2019. By using the CRS, insurers can differentiate between a highly vulnerable home and a resilient home in the same high-risk zip code, offering the latter a reasonable policy.
2. Innovative product design: Accurate data allows for the creation of innovative, tiered products. Carriers can now offer policies with discounts for specific mitigation efforts, such as fire-resistant roofing, flood vents, or defensible space. This not only empowers homeowners to take control of their risk but also creates a new, profitable market segment for insurers. This model has been successfully piloted in community-level initiatives like the UK's "Parity Project," which aims to retrofit 37 million homes to be more resilient, a model that could be replicated by the private sector in the U.S.
3. Proactive portfolio management: Carriers can use our data to actively manage their portfolios, identifying high-risk assets that need targeted mitigation or re-evaluation. Instead of a guessing game, it becomes a strategic exercise, allowing insurers to work with policyholders to proactively reduce risk and improve the long-term health of their entire book of business. This is the kind of intelligence the U.S. government is seeking to improve macroeconomic models, with Cotality’s own Dr. Howard Botts and Pete Carroll advising the White House on how to incorporate environmental risk into financial forecasting.

A new frontier for growth

The evidence is clear: ignoring the 'uninsurable' market is no longer a viable business strategy. Environmental risk is causing market devaluations and disrupting lives, and the traditional model is incapable of keeping up. This is a moment of reckoning, but it is also a moment of opportunity.

By leveraging Cotality's intelligence, P&C insurers can stop retreating and start innovating. They can tap into a massive, underserved market, grow their revenue, and become trusted partners in building a more resilient future. The gold rush isn't about finding a single, valuable nugget; it's about building a robust, data-driven framework that turns a seemingly uninsurable market into a new, profitable frontier.

Ready to turn environmental challenges into opportunities? Join us at https://www.cotality.com/resources/webinars/making-the-shift.