The Insurance State Failure
Climate-loss insolvency wipes out major insurers in multiple states at once, leaving governors demanding federal guarantees Washington cannot clearly fund.
After back-to-back mega-disasters, several major property insurers announce they can no longer honor claims in multiple states and immediately enter emergency insolvency proceedings. Mortgage markets freeze as lenders realize huge portions of collateral are now effectively uninsured.
You are the Secretary of the Treasury
The Situation Room
>Governors are demanding a federal reinsurance backstop before homeowners lose access to mortgages and rebuilding finance.
>Regional banks warn that uninsured collateral will force brutal write-downs across housing and commercial real estate.
>Congress wants numbers by morning, but no one can calculate the real climate liability fast enough.
Internal Briefing Notes
• Modern housing finance assumes insurable property risk; when insurance disappears, real-estate values and tax bases unravel together.
• State guaranty funds cannot cover simultaneous multistate insurer failure on this scale.
• A federal backstop can stabilize expectations, but may effectively socialize unlimited climate losses overnight.
Escalation Window
Reveal each phase to see how the situation deteriorates.
The housing-finance system is discovering it cannot function without insurance. What is your move?
Choose your response. There are no good options.
You may stop the panic, but place taxpayers behind open-ended climate liabilities.
You preserve federal balance-sheet discipline, but likely trigger housing collapse and bank stress across multiple regions.
You buy time, but at the cost of freezing property markets and deepening legal uncertainty.
Related Entities
Explore the institutions, countries, and actors involved in this scenario.
Scenario Lab Feedback