When Zillow Hid Climate Risk Scores: The Clash Between Transparency, Market Forces & Insurance Costs

The recent removal by Zillow of climate risk scores from its listings after just over a year of display highlights the tension between transparency and market resistance. Initially launched in September 2024, the climate risk tool provided consumers with property-level risk insights (five risk categories—flood, fire, wind, heat, and air quality), future projections, and recommended insurance guidance based on modeling by First Street. [1][6] However, real estate agents and multiple listing services raised objections that the risk scores were misleading or overly punitive to pricing and sales; specifically noted was the California Regional MLS (CRMLS) criticizing scenarios where properties with little historical exposure to flooding were assigned high near-term flood probabilities. [5][7] Zillow’s response was to remove direct scores—seeing them replaced by subtle links to First Street’s site—preserving access to data while softening presentation. [7][2]

Meanwhile, the insurance industry is under pressure from both systemic and acute changes. The U.S. Treasury Department’s analysis (2018–2022) found premiums in high-risk areas averaged $2,321 annually—82% higher than low-risk regions. Also, the rate of non-renewals has increased — for instance, climbing to 1.06% nationally in 2023 from 0.8% in 2018. [14][16] Catastrophic losses, such as the record $40B in insured losses from the Los Angeles wildfires, exemplify how correlated risk and increasing event frequency disturb traditional actuarial assumptions. [3]

These developments are pushing insurers toward refined risk modeling, more dynamic assessments (including climate projections), and stronger disclosure and regulatory expectations. But Zillow’s case illustrates that even highly scientific risk tools may be resisted by stakeholders when perceived to unduly affect sales, property values, or reputation—especially when model calibration seems disconnected from historical experience. Open questions remain: how to reconcile model projections with empirical history; how to enable consumer agency (e.g., dispute mechanisms); how to ensure that risk disclosure does not inadvertently penalize vulnerable homeowners; and what regulation is required to standardize climate risk communications and ensure fairness in insurance markets.