Household Financial Resilience after Severe Climate Events: The Role of Insurance 

39 Pages Posted: 17 Jun 2024

See all articles by Benjamin Collier

Benjamin Collier

Temple University - Risk Management & Insurance & Actuarial Science

Carolyn Kousky

Environmental Defense Fund

Date Written: June 01, 2024

Abstract

Severe climate events pose an increasing threat to households' financial well-being. Households affected by these events can face a significant financing challenge as disaster expenses and damages may exceed tens or even hundreds of thousands of dollars. We review the existing literature to describe how households fund recovery, with a focus on the role of insurance. While insurance is a key financial tool for managing such large losses, many households are uninsured and rely on a patchwork of savings, credit, federal assistance programs, and help from family and friends. Low income households and racial or ethnic minority households have more limited access to recovery funding. Households who are unable to fund repairs appear at greater risk of financial distress in the years after the disaster. Our findings highlight the importance of disaster insurance and motivate a comprehensive view of financial recovery where income and race play critical roles.

Keywords: Disaster Recovery, Insurance Economics, Household Finance, Climate Risk

Suggested Citation

Collier, Benjamin and Kousky, Carolyn, Household Financial Resilience after Severe Climate Events: The Role of Insurance  (June 01, 2024). Fox School of Business Research Paper, Available at SSRN: https://ssrn.com/abstract=4857411 or http://dx.doi.org/10.2139/ssrn.4857411

Benjamin Collier (Contact Author)

Temple University - Risk Management & Insurance & Actuarial Science ( email )

Fox School of Business and Management
1301 Cecil B. Moore Ave.
Philadelphia, PA 19122
United States

Carolyn Kousky

Environmental Defense Fund ( email )

1875 Connecticut ave
257 Park Avenue South
Washington, DC 20009
United States

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