Insurance and climate risks: Policy lessons from three bounding scenarios

Climate change poses complex risks without precedent that challenge established planning and risk management tools, including property insurance. The nature and timing of transitions in markets and institutions in response to growing climate risks will shape prospects for future socioeconomic well-being. As property insurance markets in the United States face higher levels of turmoil, policymakers are weighing various interventions to stabilize not only insurance but also housing and mortgage markets. We identify policy lessons based on the investigation of three bounding scenarios designed to address the question of how near-term (1 to 3 y) policy and regulatory choices surrounding insurance markets in Florida could influence medium-term (3 to 15 y) risk levels, disaster recovery, housing markets, and local economic outcomes. Since our policy choices today have a profound impact on future outcomes, careful consideration of the longer-term impacts of today's policy choices is required to secure more effective and equitable adaptation decisions and pathways.