Science
Earthquake risks and rising costs: The price of operating California's last nuclear plant
Under two gargantuan domes of thick concrete and steel that rise along California’s rugged Central Coast, subatomic particles slam into uranium, triggering one of the most energetic reactions on Earth.
Amid coastal bluffs speckled with brush and buckwheat, Diablo Canyon Nuclear Power Plant uses this energy to spin two massive copper coils at a blistering 30 revolutions per second. In 2022, these generators — about the size of school buses — produced 6% of Californians’ power and 11% of their non-fossil energy.
Yet it comes at almost double the cost of other low-carbon energy sources and, according to the federal agency that oversees the plant, carries a roughly 1 in 25,000 chance of suffering a Chernobyl-style nuclear meltdown before its scheduled decommissioning in just five years — due primarily to nearby fault lines.
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As Gov. Gavin Newsom’s administration looks to the aging reactor to help ease the state’s transition to renewable energy, Diablo Canyon is drawing renewed criticism from those who say the facility is too expensive and too dangerous to continue operating.
Diablo is just the latest in a series of plants built in the atomic frenzy of the 1970s and ’80s seeking an operating license renewal from the federal Nuclear Regulatory Commission as the clock on their initial 40-year run ticks down. As the price of wind and solar continues to drop, the criticisms against Diablo reflect a nationwide debate.
Tom Jones, right, a regulatory and environmental senior director at PG&E, and Jerel Strickland, a senior licensing and spent nuclear storage consultant, walk past one of two massive turbine-generator units inside the turbine building at Diablo Canyon Nuclear Power Plant recently.
(Genaro Molina/Los Angeles Times)
The core of the debate lives in the quaint coastal town of San Luis Obispo, just 12 miles inland from the concrete domes, where residents expected Diablo Canyon to shut down over the next year after its license expired.
Instead, Newsom struck a deal on the last possible day of the state’s 2021-22 legislative session to keep the plant running until 2030, citing worries over summer blackouts as the state transitions to clean energy. The activists who had negotiated the shutdown with PG&E and the state six years prior were left stunned.
Today, the plant is still buzzing with life: Nuclear fission, in the deep heart of the plant, continues to superheat water to 600 degrees at 150 times atmospheric pressure. Generators continue to whir with a haunting and deafening hum that reverberates throughout the massive turbine deck.
Left untouched, nuclear fission erupts into a runaway chain reaction that can heat the core of a nuclear plant to thousands of degrees, liquifying the metal around it into radioactive lava.
So, operators have to constantly stifle the reaction to keep it under control.
In the event of an earthquake, they need to stop the reaction as quickly as possible. But if the shaking is so rapid and intense that the plant is critically damaged before it can shut down, operators could become helpless in preventing a meltdown.
Tom Jones, senior director of Regulatory Environmental and Repurposing at PG&E, talks about how the Diablo Canyon Nuclear Power Plant operates.
(Genaro Molina/Los Angeles Times)
Tom Jones, senior director of Regulatory Environmental and Repurposing at PG&E, is reflected in a display that explains the fission process at Diablo Canyon Nuclear Power Plant recently.
(Genaro Molina/Los Angeles Times)
Diablo Canyon is built to endure specific intensities and speeds of shaking — but predicting how likely an earthquake is to exceed those specifications is no easy task. Earthquakes are the result of deeply complex underground motion and forces, and they’re notoriously chaotic.
In order to start estimating the seismic safety of the plant, geophysicists have to understand: first, where the faults are; second, how much they’re slipping to trigger earthquakes; and finally, when those quakes hit, how much shaking they cause.
Earthquakes account for about 65% of the risk for a worst-case scenario meltdown. Potential internal fires at the plant make up another 18%. The last 17% is made up of everything from aircraft impacts and meteorites to sink holes and snow.
In assessing the likelihood of all these threats, the Nuclear Regulatory Commission estimates that in any given year, each of Diablo Canyon’s two reactor units has a roughly 1 in 12,000 chance of experiencing a nuclear meltdown similar to Japan’s Fukushima disaster.
Likewise, there’s about a 1 in 127,000 chance a failure will cause the plant to release exorbitant amounts radioactive material into the atmosphere before residents could evacuate, creating a Chernobyl-style disaster.
This means that, every year, nearby residents have roughly the same chance of seeing a nuclear meltdown as dying in a car crash. Also, in any given year, they’re about 50 times more likely to face a mass-casualty radioactive catastrophe than get struck by lightning.
Diablo Canyon employees work around the clock to ensure the risk is as small as possible. “Our safety culture, it’s always on the top of my mind,” said Maureen Zawalick, the vice president of business and technical services at Diablo. “It’s in my DNA.”
Maureen Zawalick, PG&E Business and Technical Services vice president, in her office at the Diablo Canyon Power Plant.
(Genaro Molina/Los Angeles Times)
The plant is the only one in the U.S. with a dedicated geoscience team that studies the region’s seismic landscape. And like other nuclear facilities, Diablo has done countless tests on its equipment, hosted walkthroughs with regulators to identify possible points of failure and generated thousands of pages of analysis on the facility’s ability to withstand the largest earthquake possible at the site.
Earthquake precautions include massive metal dampers that are fixed to essential infrastructure, such as the duct carrying the control rooms’ air supply. In the event of a tremor, monstrous concrete pillars penetrate deep into the bedrock to keep the building and essential infrastructure grounded. The hefty concrete walls reinforced with steel rebar as thick as a human arm safely distribute the forces throughout the structure to prevent critical cracks or collapses.
If the plant loses power, there are backup generators for the backup generators.
A worker pushes a utility cart past a billboard that lists employee goals at Diablo Canyon Nuclear Power Plant recently.
(Genaro Molina/Los Angeles Times)
Operators spend a fifth of their time on the job training for every possible nightmare. Diablo has a simulator on site that’s an exact replica of the Unit One control room. It’s capable of putting operators through the worst conditions imaginable. It shakes with the vigor of a real earthquake. The lights flicker and the analog dials spin back up as emergency power comes online.
For everyone working on site — including the senior leadership team — safety is personal. Should something go wrong, their lives are on the line.
“With any source of energy, there is risk,” said Zawalick. “All the independent assessments, all the audits, all the third party reviews, all of that …. is what gives me the confidence and the security and the safety of why I’ve been out here almost 30 years.” Her office is no more than 500 feet from the reactors.
“If there ever was an earthquake of any magnitude in this community,” she said, “I would grab my two daughters and we’d come here.”
Maureen Zawalick, PG&E Business and Technical Services vice president, looks out her office window at Diablo Canyon Nuclear Power Plant recently.
(Genaro Molina/Los Angeles Times)
Many critics charge that the risks are understated — due in part to a cozy relationship between industry and regulators. (Some scientists involved with one of Diablo Canyon’s two independent review organizations have collaborated on scientific papers with PG&E staff and funding.)
The Nuclear Regulatory Commission also oversees the plant and conducts its own investigations. In July, the government agency dismissed all three formal criticisms against Diablo’s seismic safety in the plant’s license renewal process.
Sam Blakeslee, a San Luis Opispo geophysicist and former state senator and Assembly member, has a list of technical concerns — primarily the lack of shaking data close to fault lines, which are used to inform the models that predict earthquake motion at the plant — but he likens the core of his concern to the NASA Challenger disaster.
NASA publicly touted a strong safety culture and low chances of things going wrong. Yet, the investigation found political and public pressures had corrupted the safety from the top down.
He argues this is a possibility for any large organization dealing with complex and potentially dangerous systems. Therefore, people need to constantly hold the plant accountable.
“That’s why I tend to try to make sure that the community voice is present,” he said, “ because we are the ones that will pay the price.”
In 2022, Newsom introduced a proposal to keep Diablo Canyon open past its two reactors’ 2024 and 2025 shutdown dates. His proposal, distributed to lawmakers just three weeks before the end of the legislative session, set off a flurry of negotiations among PG&E, the governor and the Legislature.
After discussion drew on past midnight, the Legislature passed the bill.
But it comes at a cost.
While the average price of solar and wind have dropped dramatically over the past 15 years, nuclear’s has been steadily rising. In 2009, solar cost three times what nuclear did, and wind was about even with it. Now, nuclear is over two times the cost of both renewables.
Technical advancements have slashed the price of renewable energy, but nuclear power has faced more outages, equipment replacements and increasingly stringent and expensive safety requirements in the wake of the Fukushima disaster.
One study from MIT researchers found that about a third of the increasing cost could be attributed to safety requirements from the Nuclear Regulatory Commission. They attribute another third to research and development projects for efficiency, reliability and safety improvements, and they assign the final third to a decrease in worker productivity — perhaps in part due to lower morale.
Twin containment domes rise above the facility as seen through a windshield on the drive to the Diablo Canyon Nuclear Power Plant.
(Genaro Molina/Los Angeles Times)
PG&E is estimating that Diablo Canyon will produce energy at $91 per megawatt-hour during its extension. (The average U.S. household buys about 10 megawatt-hours every year.)
However, the Alliance for Nuclear Responsibility argues the plant’s cost is even higher. David Weisman, the legislative director at the alliance, said PG&E is using optimistic predictions of its energy output for the extended period — 5% higher than previous years.
On top of that, the state gave PG&E a $1.4-billion loan to alleviate the initial costs of extended operations. But Wiesman said the funds don’t necessarily need to go toward offsetting the cost of running Diablo. The federal government agreed to reimburse the state up to $1.1 billion — depending on whether the plant meets specific operating criteria — and PG&E is expected to pay off the rest of the loan with profits.
While the loan isn’t a cost that consumers would see on their energy bills, taxpayers across the country could foot the bill. Weisman argued that it brings Diablo’s cost to a maximum of $115 per megawatt-hour — roughly double the cost of solar.
Yet Newsom argues that if California is to meet its goals of 60% renewable energy by 2030, Diablo needs to stay online in the meantime to ensure the state has reliable power amid heatwaves and wildfires.
Diablo Canyon essentially runs 24/7, providing constant power to the state (assuming it doesn’t have any issues, which it sometimes does). For solar to provide similarly constant power, the electric grid will require a massive expansion of its battery infrastructure to store the energy between the midday peak of energy production and the evening peak of energy use.
However, new studies are finding that energy storage is a feasible approach to grid reliability — and that even when adding the price of that infrastructure, solar still costs less than nuclear.
Tom Jones, a regulatory and environmental senior director at PG&E, talks about the number of days that Turbine Unit One has operated to bring power to California while inside the turbine building at Diablo Canyon Power Plant recently.
(Genaro Molina/Los Angeles Times)
Since Diablo’s extension was signed into law, California has almost doubled its battery storage. The state now has enough to supplement about a quarter of the state’s power needs for about half an hour during peak energy usage (although, in practice, it would likely supplement much less for much longer).
“That’s four or five Diablo Canyons,” said Weisman. Newsom should “save the people of California [billions of dollars] thrown down PG&E’s rat hole, declare triumphant victory in the renewable race and accept the laurels.”
Instead, at a recent press event announcing California had reached a fifth of its storage capacity goal, Newsom laughed off the idea that Californians will no longer have to worry about blackouts.
“We have a lot of work to do still in moving this transition, with the kind of stability that’s required,” he said. “So no, this is not today announcing that blackouts are part of our past.”
Diablo Canyon’s leaders and advocates view the plant as supporting California through this challenging transition period: It’s not perfect, but it provides the state with much-needed reliable, clean power, they say.
In a conference call shortly after Diablo’s initial 2024 shutdown date was negotiated, then-chief executive of PG&E Tony Earley acknowledged the plant would eventually become too expensive to operate.
“As we make this transition, Diablo Canyon’s full output will no longer be required,” he said.
Steam rises from the Pacific Ocean where an outfall of heated water from the Diablo Canyon Nuclear Power Plant pours into coastal waters.
(Genaro Molina/Los Angeles Times)
Zawalick said the Diablo team is ready to continue operating as long as the state needs it to. “Thinking about electrification, [electric vehicle] demand, continued drought, the temperatures we’re seeing, wildfires … tariffs — I mean, the list goes on,” she said. “That’s making the equation a bit challenging to see exactly when Diablo will shut down versus how long Diablo will be needed by the state.”
SACRAMENTO — California Gov. Gavin Newsom has positioned himself as a national public health leader by staking out science-backed policies in contrast with the Trump administration.
After Health and Human Services Secretary Robert F. Kennedy Jr. fired Centers for Disease Control and Prevention Director Susan Monarez for refusing what her lawyers called “the dangerous politicization of science,” Newsom hired her to help modernize California’s public health system. He also gave a job to Debra Houry, the agency’s former chief science and medical officer, who had resigned in protest hours after Monarez’s firing.
Newsom also teamed up with fellow Democratic governors Tina Kotek of Oregon, Bob Ferguson of Washington and Josh Green of Hawaii to form the West Coast Health Alliance, a regional public health agency, whose guidance the governors said would “uphold scientific integrity in public health as Trump destroys” the CDC’s credibility. Newsom argued establishing the independent alliance was vital as Kennedy leads the Trump administration’s rollback of national vaccine recommendations.
More recently, California became the first state to join a global outbreak response network coordinated by the World Health Organization, followed by Illinois and New York. Colorado and Wisconsin signaled they plan to join. They did so after President Trump officially withdrew the United States from the agency on the grounds that it had “strayed from its core mission and has acted contrary to the U.S. interests in protecting the U.S. public on multiple occasions.” Newsom said joining the WHO-led consortium would enable California to respond faster to communicable disease outbreaks and other public health threats.
Although other Democratic governors and public health leaders have openly criticized the federal government, few have been as outspoken as Newsom, who is considering a run for president in 2028 and is in his second and final term as governor. Members of the scientific community have praised his effort to build a public health bulwark against the Trump administration’s slashing of funding and scaling back of vaccine recommendations.
What Newsom is doing “is a great idea,” said Paul Offit, an outspoken critic of Kennedy and a vaccine expert who formerly served on the Food and Drug Administration’s vaccine advisory committee but was removed under Trump in 2025.
“Public health has been turned on its head,” Offit said. “We have an anti-vaccine activist and science denialist as the head of U.S. Health and Human Services. It’s dangerous.”
The White House did not respond to questions about Newsom’s stance and Health and Human Services declined requests to interview Kennedy. Instead, federal health officials criticized Democrats broadly, arguing that blue states are participating in fraud and mismanagement of federal funds in public health programs.
Health and Human Services spokesperson Emily Hilliard said the administration is going after “Democrat-run states that pushed unscientific lockdowns, toddler mask mandates, and draconian vaccine passports during the COVID era.” She said those moves have “completely eroded the American people’s trust in public health agencies.”
Public health guided by science
Since Trump returned to office, Newsom has criticized the president and his administration for engineering policies that he sees as an affront to public health and safety, labeling federal leaders as “extremists” trying to “weaponize the CDC and spread misinformation.” He has excoriated federal officials for erroneously linking vaccines to autism, warning that the administration is endangering the lives of infants and young children in scaling back childhood vaccine recommendations. And he argued that the White House is unleashing “chaos” on America’s public health system in backing out of the WHO.
The governor declined an interview request, but Newsom spokesperson Marissa Saldivar said it’s a priority of the governor “to protect public health and provide communities with guidance rooted in science and evidence, not politics and conspiracies.”
The Trump administration’s moves have triggered financial uncertainty that local officials said has reduced morale within public health departments and left states unprepared for disease outbreaks and prevention efforts. The White House last year proposed cutting Health and Human Services spending by $33 billion, including $3.6 billion from the CDC. Congress largely rejected those cuts last month, although funding for programs focusing on social drivers of health, such as access to food, housing and education, were axed.
The Trump administration announced that it would claw back more than $600 million in public health funds from California, Colorado, Illinois and Minnesota, arguing that the Democratic-led states were funding “woke” initiatives that didn’t reflect White House priorities. Within days, the states sued and a judge temporarily blocked the cut.
“They keep suddenly canceling grants and then it gets overturned in court,” said Kat DeBurgh, executive director of the Health Officers Assn. of California. “A lot of the damage is already done because counties already stopped doing the work.”
Federal funding has accounted for more than half of state and local health department budgets nationwide, with money going toward fighting HIV and other sexually transmitted infections, preventing chronic diseases, and boosting public health preparedness and communicable disease response, according to a 2025 analysis by KFF, a health information nonprofit that includes KFF Health News.
Federal funds account for $2.4 billion of California’s $5.3-billion public health budget, making it difficult for Newsom and state lawmakers to backfill potential cuts. That money helps fund state operations and is vital for local health departments.
Funding cuts hurt all
Los Angeles County public health director Barbara Ferrer said if the federal government is allowed to cut that $600 million, the county of nearly 10 million residents would lose an estimated $84 million over the next two years, in addition to other grants for prevention of HIV and other sexually transmitted infections. Ferrer said the county depends on nearly $1 billion in federal funding annually to track and prevent communicable diseases and combat chronic health conditions, including diabetes and high blood pressure. Already, the county has announced the closure of seven public health clinics that provided vaccinations and disease testing, largely because of funding losses tied to federal grant cuts.
“It’s an ill-informed strategy,” Ferrer said. “Public health doesn’t care whether your political affiliation is Republican or Democrat. It doesn’t care about your immigration status or sexual orientation. Public health has to be available for everyone.”
A single case of measles requires public health workers to track down 200 potential contacts, Ferrer said.
The U.S. eliminated measles in 2000 but is close to losing that status as a result of vaccine skepticism and misinformation spread by vaccine critics. The U.S. had 2,281 confirmed cases last year, the most since 1991, with 93% in people who were unvaccinated or whose vaccination status was unknown. This year, the highly contagious disease has been reported at schools, airports and Disneyland.
Public health officials hope the West Coast Health Alliance can help counteract Trump by building trust through evidence-based public health guidance.
“What we’re seeing from the federal government is partisan politics at its worst and retaliation for policy differences, and it puts at extraordinary risk the health and well-being of the American people,” said Georges Benjamin, executive director of the American Public Health Assn., a coalition of public health professionals.
Robust vaccine schedule
Erica Pan, California’s top public health officer and director of the state Department of Public Health, said the West Coast Health Alliance is defending science by recommending a more robust vaccine schedule than the federal government. California is part of a coalition suing the Trump administration over its decision to rescind recommendations for seven childhood vaccines, including for hepatitis A, hepatitis B, influenza and COVID-19.
Pan expressed deep concern about the state of public health, particularly the uptick in measles. “We’re sliding backwards,” Pan said of immunizations.
Sarah Kemble, Hawaii’s state epidemiologist, said Hawaii joined the alliance after hearing from pro-vaccine residents who wanted assurance that they would have access to vaccines.
“We were getting a lot of questions and anxiety from people who did understand science-based recommendations but were wondering, ‘Am I still going to be able to go get my shot?’” Kemble said.
Other states led mostly by Democrats have also formed alliances, with Pennsylvania, New York, New Jersey, Massachusetts and several other East Coast states banding together to create the Northeast Public Health Collaborative.
Hilliard, of Health and Human Services, said that even as Democratic governors establish vaccine advisory coalitions, the federal Advisory Committee on Immunization Practices “remains the scientific body guiding immunization recommendations in this country, and HHS will ensure policy is based on rigorous evidence and gold standard science, not the failed politics of the pandemic.”
Influencing red states
Newsom, for his part, has approved a recurring annual infusion of nearly $300 million to support the state Department of Public Health, as well as the 61 local public health agencies across California, and last year signed a bill authorizing the state to issue its own immunization guidance. It requires health insurers in California to provide patient coverage for vaccinations the state recommends even if the federal government doesn’t.
Jeffrey Singer, a doctor and senior fellow at the libertarian Cato Institute, said decentralization can be beneficial. That’s because local media campaigns that reflect different political ideologies and community priorities may have a better chance of influencing the public.
A KFF analysis found some red states are joining blue states in decoupling their vaccine recommendations from the federal government’s. Singer said some doctors in his home state of Arizona are looking to more liberal California for vaccine recommendations.
“Science is never settled, and there are a lot of areas of this country where there are differences of opinion,” Singer said. “This can help us challenge our assumptions and learn.”
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling and journalism.
Two friends bought nearly identical homes last year, in the same northern Minnesota neighborhood, for the same price.
But Tara Novak pays more than twice as much for home insurance as Petra Rodriguez. The only difference? Ms. Novak has a lower credit score.
Across the country, people with weaker credit histories are paying far more for home insurance than owners with spotless records.
Where the home insurance rate gap between “fair” and “excellent” credit is higher
Home insurance premiums have risen rapidly in recent years, fueled by climate change, building costs and inflation. The price shock has rippled into the real estate market, dragging down home prices in areas vulnerable to disasters and leading insurers to abandon homeowners in risky places.
But these dynamics obscure another problem: The home insurance market has cleaved in two along a boundary defined more by a customer’s personal history than by the risk of a disaster hitting their home.
Americans with weaker credit histories, usually from missed payments or high amounts of debt, now pay significantly more for insurance, regardless of where they live, two new studies have found. While those with poor credit histories often can’t purchase homes at all, people with “fair” scores, which range from around 580 to 669, are paying twice as much in some places as people with “excellent” scores of about 800 or higher. And the gap is growing.
Insurers use a metric based on credit history known as an insurance score to set rates, and the figure tracks closely with a customer’s credit score.
The penalty for having a “fair” credit history versus an “excellent” one
States with the biggest pricing gaps
That can mean owners of identical homes, like Ms. Novak and Ms. Rodriguez, pay wildly different rates to insure them. For most people, it’s now just as expensive to have a credit score of “fair” as it is to live in an area likely to experience a disaster like a hurricane or wildfire. About 29 percent of consumers have credit scores that are categorized as “fair” or “poor.”
“There’s so many reasons people have bad credit,” Ms. Novak said. “It’s not like I’ve ever not paid a bill on time. I’m a stickler on my bills, I’m a stickler on my rent, never been late. This is not fair.”
“The choice to use credit scores in pricing means that those lower-credit home owners in risky areas are effectively subsidizing more affluent high-credit homeowners who also live in risky areas,” said Nick Graetz, assistant professor of sociology at the University for Minnesota, who wrote one of the recent papers. “So in a lot of ways, you can keep your insurance price down if you’re high income, high credit — even if you live on the coast of Florida.”
A handful of states have banned insurers from using credit data because of concerns about fairness and the potential for discrimination against low-income people and people of color, but the majority allow it.
For those with both weaker credit and high disaster risk, the combination can set them up for a downward spiral: disasters tend to be followed by decreases in credit scores as people use credit cards and bank loans to recover. That can lead to higher insurance rates, pushing monthly housing costs further out of reach.
“When a disaster hits, there’s a loss of income that occurs, and then that can impact someone’s credit score because they can’t pay their debt, they can’t pay their rent, they can’t pay their mortgage,” said Lance Triggs, executive vice president at Operation HOPE, a financial literacy nonprofit. “And now they’re faced with higher insurance premiums post-disaster.”
A working paper released today by the National Bureau of Economic Research found that homeowners with the lowest credit scores paid, on average, $550 more in 2024 for home insurance than those with the highest scores.
The findings broadly track with data from Quadrant Information Services analyzed by The New York Times, which found that, on average, lower credit scores meant higher premiums across every state that allowed the practice. Dr. Graetz used the same data set for his research, which he did in collaboration with the Consumer Federation of America and the Climate and Community Institute.
When a windstorm last year hit the home of Audrey Thayer, a city council member in Bemidji, Minn., it ripped the siding off her house and stripped shingles from her roof.
Ms. Thayer’s insurance did not cover all the damage. As she fought her insurer for more money, she opened new credit cards and bank loans to repair her home. Her credit score dropped as she tried to find a new insurance plan.
Ms. Thayer, a member of the White Earth Nation, said she was not aware that her credit score could affect her home insurance rates, even though she teaches about credit ratings at a nearby tribal college. “Most of the folks here do not have good credit,” said Ms. Thayer, whose community is one of the poorest in the state. “I did not know what a credit score was until I was 35 or so.”
In Texas, the advocacy group Texas Appleseed found that some insurers charge people with poor credit up to 12 times as much as people with excellent credit for certain policies, said Ann Baddour, the director of the nonprofit’s Fair Financial Services Project.
Higher costs have serious implications for low-income homeowners who live in the path of hurricanes, said Nadia Erosa, the operations manager at Come Dream Come Build, a nonprofit community housing development organization. After the Brownsville, Texas, region saw intense flooding last spring, some residents turned to companies offering high-interest loans to fund repairs, she said, raising the risk of the disaster-credit spiral.
“Delinquencies are going up because people cannot afford their payment,” she said.
The price of risk
Before they can get a mortgage, homebuyers are usually required by lenders to purchase home insurance.
“Households with insurance have fewer financial burdens, fewer unmet needs, they recover faster, they’re more likely to rebuild,” said Carolyn Kousky, an economist and founder of Insurance for Good, a nonprofit that focuses on finding new approaches to risk management. “Yet the people who need insurance the most are the least able to afford it.”
Insurance companies consider a variety of factors when setting the premium for a property. They might examine the age of the roof, or the area’s vulnerability to hurricanes or wildfires. They factor in how much it would cost to rebuild the house if it were damaged.
Insurers have argued that credit history is also worth considering because people with low scores tend to file more claims than those with excellent scores, an assertion that is backed up by the working paper published in the National Bureau of Economic Research today. This likely happens because people with weaker credit histories tend to have less income, and when their home is damaged, they file insurance claims for smaller fixes that a wealthier homeowner might pay for out of pocket.
Paul Tetrault, senior director at the American Property Casualty Insurance Association, a trade organization, said credit scores are a valid way to price premiums.
But others argue that using credit information to price insurance doesn’t make sense.
Because a homeowner pays for insurance upfront, “it’s not like you’re really extending a loan to the customer where you would be worried about the risk of repayment,” Ms. Kousky said. She points out that insurance companies can opt not to renew a homeowner’s policy if they believe it is too risky — a tactic they have been using with increasing frequency.
The NBER analysis found that homeowners who want to pay less for insurance should pay off debt to raise their credit score rather than replace roofs and make other improvements to avoid damage when disaster strikes.
Others believe that even if credit scores are accurate predictors of future claims, they shouldn’t be used to set premiums because that can perpetuate or worsen disparities. For example, people in their mid-20s who are Black, low-income, or grow up in impoverished regions have significantly lower credit scores than their peers, a July working paper from Opportunity Insights, a not-for-profit organization at Harvard University, found.
“When the government and the financial system mandate that we buy a product, there’s a special obligation to make sure the pricing is fair,” said Doug Heller, director of insurance at the Consumer Federation. “To me that is an absolutely solid reason, just like we don’t allow pricing based on race or income or ethnicity or religion.”
A natural experiment
A handful of states, including California and Massachusetts, have banned or limited the use of credit scores in setting home insurance premiums, despite opposition from the insurance industry.
In Nevada, where a temporary pandemic-related rule prevented insurers from using credit history to increase premiums for existing customers from 2020 to 2024, companies refunded approximately $27 million to nearly 200,000 policyholders, said Drew Pearson, a spokesman for the Nevada Division of Insurance.
Perhaps the clearest example of the effects of these bans comes from Washington State, which banned the use of credit information in setting home insurance premiums starting in June 2021. The rule immediately faced legal challenges, and was in effect for just a few months until it was overturned in court.
But the episode allowed researchers to evaluate the effect of credit factors on insurance premiums. When the rule took effect, people with the lowest credit scores saw a decrease in premiums of about $175 annually while those with the highest scores saw an increase of about $100, the NBER analysis found.
“We could see the dynamics of insurance pricing for the same households over time,” said Benjamin Keys, a professor at the University of Pennsylvania’s Wharton School, who co-authored the paper.
What homeowners paid before and after a ban on credit-based pricing in Washington State
Values compared with premiums paid by homeowners with “medium” credit scores (717 to 756)
In Minnesota, where Tara Novak, Petra Rodriguez and Audrey Thayer live, a state task force looked at ways to lower insurance costs for residents. It recently considered a ban or limit on the use of credit scores to set rates, but did not move forward with a recommendation.
Ms. Rodriguez said she doesn’t think it’s fair that her friend Ms. Novak should have to pay so much more for insurance to live in an identical house.
A credit score doesn’t capture anything about a person’s habits, or what they’re like as a tenant, or even years of on-time rent payments, she said. “It’s not who you are,” she said.
Methodology
Home insurance policy rates were supplied by Quadrant Information Services, an insurance data solutions company. The rates shown are representative of publicly sourced filings and should not be interpreted as bindable quotes. Actual individual premiums may vary.
‘States with the biggest pricing gaps’Rates shown are based on a home insurance policy with $400,000 of dwelling coverage and a $100,000 liability limit on a new home, for a homeowner age 50 or younger. Rates are averaged for all the individual company filings represented in the sample, which add up to a majority of the market share in each state but do not cover all active insurers in the state. Rates are also averaged to the state level from zip code level data.
‘The credit penalty in each state’Each insurance company incorporates credit history information differently, often using proprietary methods, so the scores do not map directly to FICO credit scores.
‘What homeowners paid before and after a ban on credit-based pricing in Washington State’Data shown are based on observations of real home insurance policies and homeowner credit scores from ICE McDash analyzed by the researchers of Blonz, Hossain, Keys, Mulder and Weill (2026). The price comparisons across credit score tiers controlled for variance in disaster risk, insurance policy characteristics, geography, and other year to year fluctuations.
Planetary warming has significantly accelerated over the past 10 years, with temperatures rising at a higher rate since 2015 than in any previous decade on record, a new study showed.
The Earth warmed around 0.35 degrees Celsius in the decade to 2025, compared to just under 0.2C per decade on average between 1970 and 2015, according to a paper published on Friday in the scientific journal Geophysical Research Letters. This is the first statistically significant evidence of an acceleration of global warming, the authors said.
The past three years have been the hottest on record, compared to the average before the Industrial Revolution. In 2024, warming went past 1.5C, the lower limit set by the Paris Agreement. That target refers to temperature increases over 20 years, but breaching it for one year shows efforts to slow down climate change have been insufficient, the scientists who wrote the new paper said.
The findings shed light on an ongoing debate among researchers. While there is consensus that greenhouse gas emissions have caused the planet to heat up since pre-industrial times, that warming had been steady for decades. But record-breaking temperatures in recent years have led scientists to question whether the pace of temperature gains is accelerating.
Demonstrating that was difficult due to natural fluctuations in temperatures. The researchers filtered out the “noise” to make the “underlying long-term warming signal” more clearly visible, said Grant Foster, a co-author of the study and a U.S.-based statistics expert.
Researchers isolated phenomena including the El Niño weather phase, volcanic eruptions and solar irradiance. When looking at temperature increases without their influence, the authors concluded the evidence is “strong” that the accelerated warming was not due to an unusually hot 2023 and 2024, but that since 2015 global temperatures departed from their previous, slower path of warming.
The new report adds to a growing body of work that indicates climate change is having a quicker and larger impact on the planet than scientists have understood. A separate paper published this week found that many studies on sea-level increases underestimate how much water along the coast has already risen.
“If the warming rate of the past 10 years continues, it would lead to a long-term exceedance of the 1.5C limit of the Paris Agreement before 2030,” said Stefan Rahmstorf, the lead author of the warming study and a researcher at the Potsdam Institute for Climate Impact Research. “How quickly the Earth continues to warm ultimately depends on how rapidly we reduce global CO2 emissions from fossil fuels to zero.”
Millan writes for Bloomberg.
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