SSRN Electronic Journal,
Journal Year:
2021,
Volume and Issue:
unknown
Published: Jan. 1, 2021
Homeowners'
insurance
provides
households
financial
protection
from
climate
losses.
To
improve
access
and
affordability,
state
regulators
impose
price
controls
on
companies.
Using
novel
data,
we
construct
a
new
measure
of
rate
setting
frictions
for
individual
states
show
that
different
exercise
varying
degrees
control,
which
positively
correlates
with
how
exposed
is
to
events.
In
high
friction
states,
insurers
are
more
restricted
in
their
ability
set
rates
adjust
less
frequently
by
lower
amount
after
experiencing
part,
overcome
pricing
cross-subsidizing
across
states.
We
response
losses
increase
low
Over
time,
get
disjoint
underlying
risk,
grow
faster
frictions.
Our
findings
have
consequences
risk
shared
the
economy
long-term
insurance.
Annual Review of Financial Economics,
Journal Year:
2021,
Volume and Issue:
13(1), P. 15 - 36
Published: June 18, 2021
In
this
article,
we
review
the
literature
studying
interactions
between
climate
change
and
financial
markets.
We
first
discuss
various
approaches
to
incorporating
risk
in
macrofinance
models.
then
empirical
that
explores
pricing
of
risks
across
a
large
number
asset
classes,
including
real
estate,
equities,
fixed
income
securities.
context,
also
how
investors
can
use
these
assets
construct
portfolios
hedge
against
risk.
conclude
by
proposing
several
promising
directions
for
future
research
finance.
Review of Financial Studies,
Journal Year:
2021,
Volume and Issue:
35(8), P. 3617 - 3665
Published: Nov. 9, 2021
Abstract
Using
the
government-sponsored
enterprises’
sharp
securitization
rules,
this
paper
provides
evidence
that,
in
aftermath
of
natural
disasters,
lenders
are
more
likely
to
approve
mortgages
that
can
be
securitized,
thereby
transferring
climate
risk.
The
identification
strategy
uses
time-varying
conforming
loan
limits
above
which
enterprises
do
not
securitize
mortgages.
Natural
disasters
lead
right
below
limit,
suggesting
an
increased
option
value
securitization.
A
model
identified
using
indirect
inference
simulates
increasing
disaster
risk
without
GSEs.
Mortgage
credit
supply
would
decline
flood
zones
and
have
a
greater
incentive
screen
Real Estate Economics,
Journal Year:
2024,
Volume and Issue:
52(3), P. 618 - 659
Published: April 15, 2024
Abstract
With
near
unanimity,
climate
scientists
project
natural
disasters
to
increase
in
frequency,
severity,
and
geographic
scope
over
the
next
century.
We
survey
academic
literature
at
intersection
of
these
risks
real
estate.
Our
review
physical
includes
price,
loan
performance,
migratory
effects
stemming
from
flooding,
wildfires,
sea
level
rise.
transition
risks,
including
energy
use
decarbonization,
as
they
relate
Where
possible,
we
explain
how
topics
may
intersect
with
housing
affordability,
especially
historically
disadvantaged
communities.
conclude
by
highlighting
critical
areas
for
future
research.
We
develop
a
new
dataset
to
study
homeowners
insurance.Our
data
on
over
47
million
observations
of
households'
property
insurance
expenditures
from
2014-2023
are
inferred
mortgage
escrow
payments.First,
we
find
sharp
33%
increase
in
average
premiums
2020
2023
(13%
real
terms)
that
is
highly
uneven
across
geographies.This
growth
associated
with
stronger
relationship
between
and
local
disaster
risk:
A
one
standard-deviation
risk
$500
higher
2023,
up
$300
2018.Second,
using
the
rapid
rise
reinsurance
prices
as
natural
experiment,
show
risk-to-premium
gradient
was
largely
caused
by
pass-through
costs.Third,
project
if
shock
persists,
growing
will
lead
climate-exposed
households
face
$700
annual
2053.Our
results
highlight
global
markets
pass
through
household
budgets,
ultimately
drive
cost
rising
climate
risk.
