Pricing of Climate Risk Insurance: Regulatory Frictions and Cross-Subsidies DOI

Sangmin Oh,

Ishita Sen,

Ana-Maria Tenekedjieva

et al.

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.

Language: Английский

Climate Finance DOI Creative Commons
Stefano Giglio, Bryan Kelly, Johannes Stroebel

et al.

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.

Language: Английский

Citations

492

Mortgage Finance and Climate Change: Securitization Dynamics in the Aftermath of Natural Disasters DOI
Amine Ouazad, Matthew E. Kahn

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

Language: Английский

Citations

125

Social interactions and households’ flood insurance decisions DOI

Zhongchen Hu

Journal of Financial Economics, Journal Year: 2022, Volume and Issue: 144(2), P. 414 - 432

Published: March 14, 2022

Language: Английский

Citations

70

Climate change concerns and mortgage lending DOI
Tinghua Duan, Frank Weikai Li

Journal of Empirical Finance, Journal Year: 2023, Volume and Issue: 75, P. 101445 - 101445

Published: Nov. 14, 2023

Language: Английский

Citations

33

Impacts of extreme weather events on mortgage risks and their evolution under climate change: A case study on Florida DOI Creative Commons
Raffaella Calabrese,

Timothy Dombrowski,

Antoine Mandel

et al.

European Journal of Operational Research, Journal Year: 2023, Volume and Issue: 314(1), P. 377 - 392

Published: Nov. 19, 2023

Language: Английский

Citations

27

When climate meets real estate: A survey of the literature DOI Creative Commons
Justin Contat,

Carrie Hopkins,

Luis Mejia

et al.

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.

Language: Английский

Citations

12

Property Insurance and Disaster Risk: New Evidence from Mortgage Escrow Data DOI

Benjamin J. Keys,

Philip Mulder

SSRN Electronic Journal, Journal Year: 2024, Volume and Issue: unknown

Published: Jan. 1, 2024

Language: Английский

Citations

7

Sustainability and Private Equity Real Estate Returns DOI
Avis Devine, Andrew Sanderford, Chongyu Wang

et al.

The Journal of Real Estate Finance and Economics, Journal Year: 2022, Volume and Issue: 68(2), P. 161 - 187

Published: June 16, 2022

Language: Английский

Citations

26

We didn’t start the fire: Effects of a natural disaster on consumers’ financial distress DOI
Anson T. Y. Ho, Kim P. Huynh, David T. Jacho‐Chávez

et al.

Journal of Environmental Economics and Management, Journal Year: 2023, Volume and Issue: 119, P. 102790 - 102790

Published: March 18, 2023

Language: Английский

Citations

15

Property Insurance and Disaster Risk: New Evidence from Mortgage Escrow Data DOI Open Access

Benjamin J. Keys,

Philip Mulder

Published: June 1, 2024

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.

Language: Английский

Citations

6