Disaster insurance can be expensive, putting it out of reach of those who need it most. Pricing or claims handling may, perhaps unintentionally, discriminate against certain groups. Current policies are largely designed for property losses, failing to provide financial protection for the wider range of costs many populations face post-disaster, including those of renters. Standard policies may also have confusing policy limitations that leave households more financially exposed to disasters than they realize.
This brief summarizes a report commissioned by Ceres, Inclusive Insurance for Climate-Related Disasters: Roadmap for the United States, written by Carolyn Kousky, PhD, Associate Vice President for Economics and Policy, Environmental Defense Fund, and Karina French, Manager, Climate Resilience Research, Environmental Defense Fund.
This report provides a framework for how insurance for climate-related disasters can be made more inclusive in the U.S. The report is informed by interviews with disaster recovery and climate justice organizations, insurance law experts, state and federal insurance regulators, and insurers. It reviews the current research on household financial exposure to climate disasters, the challenges of insuring climate disasters, and historical and current limitations within existing disaster insurance markets. The report provides a vision of an inclusive insurance system, and proposes a suite of public programs, regulatory reforms, and private market innovations to achieve that vision.
It examines the role of insurance in recovery from climate disaster across socioeconomic groups in the U.S. It provides actionable guidance for federal, state, and local leaders, as well as insurers, to expand the financial protection of insurance those whose needs are not currently met by the market and make disaster insurance more affordable, accessible, transparent, people-centered, and just.