When do firms try to shape their mature and regulated market environment rather than adapt to it in response to a market shock? Strategic management scholars typically think of such shocks as triggering varied adaptive responses that are based on firms’ comparative adjustment, transaction, and opportunity costs (CATO). We suggest that such shocks can instead motivate firms to shape their market environment. In this paper, we theorize when firms might pursue such shaping rather than adaptive strategies in response to a specific type of market shock— an extreme weather event. We argue that firms engage in shaping when such a shock introduces uncertainty about the payoffs of firms’ existing market opportunities and political opposition to firms shaping those payoffs is weak. We substantiate our theory in the empirical context of homeowner insurer underwriting responses to a record hurricane season in Florida in 2004. A qualitative process analysis traces the coevolution of insurers’ shaping and adaptive efforts and that of their legislative and regulatory environment. A difference-in-difference analysis then identifies how political opposition in the form of legislative restrictions blocked market-shaping efforts and triggered systematically different cost-based adaptive responses by specialist and generalist insurers. The paper discusses the consequences of these findings for the CATO framework and for theories of industry co-evolution.