Lab Notes

When discussing parametric insurance and its value to public entities, the conversation often involves innovative features of parametric products – speed, flexibility, and transparency. However, what makes parametric insurance valuable is as much the insurance aspect as its parametric qualities. Read this post from Serena Sowers and Aaron Michel. Read More

In the fourth and final post in our Risk Rating 2.0 series, the Wharton Risk Center had the chance to hear from two flood insurance agents on what, if any, impacts they are already seeing from the changes to the NFIP. Read More

For the third post in our Risk Rating 2.0 series, the Wharton Risk Center talks with Dave Burt, Founder & CEO of DeltaTerra Capital, an investment research company providing impact assessment tools and working with policy makers to help minimize the damage done to homeowners as asset value adjustments happen. Read More

We take a deeper look at how to understand flood risk and catastrophe models with Nancy Watkins in the second post of a Q&A-style blog series with a range of experts on the pricing of flood insurance, Read More

The Wharton Risk Center is pleased to share a blog series with a range of experts on the pricing of flood insurance and is delighted to begin this series with an interview between our Executive Director, Dr. Carolyn Kousky, and the head of the NFIP, David Maurstad. Read More

On March 21, 2022, almost exactly a year after SEC Chairman Gary Gensler was confirmed on his commitment to focus on climate-related disclosure, the SEC proposed a rule to enhance and standardize climate-related disclosures for investors. This article explores the background of climate-related disclosures, the implications of the proposed rule change, and perspectives on its ...Read More

From February 25 – 26, eight graduate students from the University of Pennsylvania attended the third Climate CAP: The Global MBA Summit on Climate, Capital, and Business, which was held at Northwestern University – Kellogg School of Management. Read about their experiences in this post by Kailun Yin who also attended. Read More

In this blog post, Susanna Berkouwer, Joshua Dean, and Kamen Velichkov share an overview of a survey done during fall 2021 with the Climate Resilience Execution Agency for Dominica (CREAD) to study people’s perceptions of hurricane risk and their insurance options. Read More

Recoop Disaster Insurance has come to market as a parametric-like solution and the first multi-peril disaster insurance product available for homeowners. The Risk Center reached out to Darren Wood, Founder, and President of Recoop Disaster Insurance to learn more about this new product. Read More

Learn about the Oct. 20 virtual panel, titled “Tackling the Climate Crisis” – a part of the ongoing Beyond Business series to explore the most complex and pressing issues affecting organizations and individuals around the world. Read More

Insurers have a unique opportunity to take on a climate risk translation role that expands the concept of insurance beyond the single client/single year paradigm to drive reductions in climate impacts, protecting the long-term availability, affordability, and reliability of insurance. Read More

Although there are many determinants of face mask-avoidance and related risky behaviors, one key factor is perceived severity of COVID-19. Understanding such health perceptions is necessary for influencing and improving behavior during the crisis. Considerable research in psychology and marketing has found that people are not good at evaluating the severity of different health conditions. ...Read More

While Direct Air Capture technology faces several challenges including resource limitations and risks such as over-reliance, carbon storage costs and safety, and unsustainable uses of captured carbon, research from the IPCC has shown that it will be required to reach emissions targets. Read more from recent graduate, Hiyori Yoshida. Read More

As millions of homes in the U.S. are exposed to increasing flood risks, the lack of insurance coverage can threaten the sustainability of the mortgage system as we know it. Yanjun (Penny) Liao and Philip Mulder share insights from their recent paper “What’s at Stake? Understanding the Role of Home Equity in Flood Insurance Demand”. Read More

Sea level rise is an inherent threat to the physical integrity and long-term existence of coastal historic places. The need for action is widely accepted, but the question of how to appropriately balance sea level rise adaptation and historic preservation goals varies across communities. Read More

President Biden recently proposed an $174 billion Electric Vehicle (EV) package. Ashmit Vyas, a rising senior in the School of Arts & Sciences, shares his opinions on the subsidies in this blog post. Read More

Can private insurance encourage homeowners to adapt their properties in order to reduce escalating flood losses from climate change? A recent study finds substantial demand for a novel supplementary flood insurance product that funds low-cost adaptations to reduce future damage when rebuilding after a flood—and shows that auto-enrollment increases that demand. Read More

Katie Collier, a senior at the School of Arts and Sciences, discusses how alternative proteins can provide the hedonic experience of real meat without negative environmental externalities despite some barriers still needing to be overcome. Read More

The Risk Center spoke with CA State Senator Ben Allen and Julia Stein at UCLA School of Law about proposed state legislation SB83 to create a revolving loan program, allowing California counties and communities to purchase vulnerable coastal properties. Read More

The city of Washington DC’s Environmental Impact Bond (EIB) offering, the first of its kind within the United States, presents a new blueprint for capitalizing municipal resilience projects while better managing the risk associated with severe storms and flooding. Alison Milman, a UPenn Undergrad, speaks to Benjamin Cohen from Quantified Ventures about this EIB. Read More

Public education campaigns to increase vaccine confidence are regularly changing. This spring we spoke with Elissa Kranzler, a former Risk Center Postdoctoral Research Fellow, about her current position evaluating one such campaign. Read More

Originally in The Hill, Risk Center Co-Directors, Howard Kunreuther and Robert Meyer, discuss cognitive biases, like myopia and inertia, that prevent people from taking climate action like investing in solar power in this op-ed. Read More

With Gary Gensler’s confirmation as the new Chair of the Securities and Exchange Commission (SEC), it’s increasingly clear that we will see increased climate disclosure requirements. Ben Thomas outlines recent developments in the space and some roadblocks the Commission will face moving forward. Read More

Eve Robinson, a fourth-year student at Wharton, writes about the need for environmental risk communication about lead poisoning in Nigeria. Read More

Lexie Shah, a fourth-year undergraduate student at the University of Pennsylvania, offers an overview of multiple environmental justice challenges and suggests needed policy shifts at the federal, state, and local levels to help overcome them. Read More

Monica Volodarsky, a senior at the Wharton School, argues that the US should transition from its current electrical system to the smart grid, a network that utilizes digital communication technology to react to changes in electricity usage, in this blog post. Read More

As the sixth largest city in the United States, Philadelphia faces a myriad of risks. Last fall we sat down with Adam Thiel, Director of the Office of Emergency Management of the City of Philadelphia, to learn more about his role with our home city. Read More

Originally in The Hill, Carolyn Kousky suggests that the incoming Biden administration could have an Ecosystem Restoration Corps to provide meaningful employment during the COVID-19 downturn and help restore America’s ecosystems. Read More

With the increasing frequency and intensity of climate-change induced natural disasters, urban food systems are at growing risk, further threatening the food security of vulnerable residents. Read More

The financial risks to local governments from climate change could in principle be broader, impacting a range of revenue sources and changing needed expenditures. In this blog post the Risk Center hears from the City of Pittsburgh about these risks. Read More

Originally on EY, this blog post highlights how leaders should assess the political risk their organizations face as well as its impact; who has responsibility for managing it; the tools available to them; and where political risk management sits in the governance structure. Read More

Originally on Knowledge@Wharton, learn why scholars who study disaster recovery are advocating for better federal policies — and greater funding — to help the most vulnerable communities and citizens prepare and rebound from hurricanes, fires, floods and other catastrophes. Read More

“In order to minimize wildfire risk, California’s electric utilities will sometimes de-energize lines in high risk conditions” Derek Nong, an undergraduate in the Vagelos Integrated Program for Energy Research at the University of Pennsylvania, writes in this blog post. Read More

Melting sea ice is opening up the potential for increased maritime traffic in the Arctic—presenting challenges for insurers and highlighting tensions between state interests and environmental concerns. Read More

From Friday, September 11 to Sunday, September 13, the third annual the Hack-for-Resilience competition (“H4R”) was hosted by Wharton Risk Center and the Insurance Information Institute’s (“Triple-I”) Resilience Accelerator as part of the PennAppsXXI hackathon. Read More

Low-income households too often slip through the cracks of relief and recovery assistance. In many cases, this is by design. Our disaster policies do not provide equitable help, leaving those most in need with insufficient resources to respond and rebuild. Originally posted on The Hill, read this Op-Ed from Carolyn Kousky and Carlos Martin. Read More

COVID-19 has disrupted nearly every aspect of daily life and captured the world’s attention. Governments, nonprofits, and individuals have directed billions of dollars to COVID-19 relief. Although these efforts are commendable, the attention to the pandemic likely overshadows the urgency of other causes for which donations translate to proven impact. Read More

California has faced challenges over the years in convincing communities and property owners to adopt land use measures to reduce the likelihood of a fire spreading, notably in areas that are most prone to this risk: the wildland-urban interface (WUI). California’s current fires are a reminder of the need for undertaking strategic measures now to ...Read More

Cultural items, such as songs, books, movies, etc. influence their consumers’ behavior. At the same time, they also represent the setting and environment they are produced in. Dr. Reihane Boghrati discusses her research on misogyny in music in this blog post. Read More

As climate change drives up disaster losses, risk transfer tools can help provide financial resiliency to households and communities. Can innovative approaches to disaster coverage help? Originally published by BRINK, read more from Risk Center Executive Director, Carolyn Kousky, and Andy Read of Guy Carpenter. Read More

First published in Svenska Dagbladet, Arthur van Benthem, Co-Lead of The Risk Center’s Business, Climate and Environment Lab, and others discuss their research on coronavirus-related policy interventions that present an opportunity to do things that also benefit the climate. Read More

The World Bank issues CAT bonds for many client countries around the world. Similar to insurance, CAT bonds transfer a client’s disaster risk to financial markets. The Risk Center reached out to Michael Bennett and Naomi Cooney at the World Bank Treasury to hear about the role of CAT bonds in sovereign disaster risk financing ...Read More

Originally posted on the Haas Energy Institute’s blog, Susanna Berkouwer writes about how Ghanaians were promised heavily subsidized electricity for the first three months of the pandemic. What happened? Read More

Besides immediate property damages, wildfires can bring about longer-term impacts. For many local governments, a nearby wildfire can take a heavy toll on their fiscal health. Read More

The Catalyst: How to Change Anyone’s Mind, a new book by Risk Center Senior Fellow Jonah Berger, introduces a revolutionary approach to change. “Successful change isn’t about pushing harder or exerting more energy. It’s about removing barriers.” Read More

While the number of US wildfires per year remains fairly constant, the total acreage burned and average fire size has increased over the last thirty years.Without insurance, many individuals in wildfire-prone areas likely have insufficient resources to recover from these devastating events. Read More

While there are a number of non-behavioral factors that affect households’ decision to purchase flood insurance, such as ability-to-pay and lack of information about risk or insurance, behavioral biases likely play a large role. Read More

Extreme wildfires have raised broad concerns about the future of wildfire risk management programs. This opinion piece highlights the need for homeowners and communities to invest in cost-effective mitigation measures. Read More

In this post, Alexander Braun, a Senior Fellow at the Risk Center, with his colleague, Nikals Haeusle, discuss the role of block chain in insurance. Read More

“How complicated can it be?” you might ask. Great question. Reese May from SBP discusses the process survivors must navigate to receive basic recovery grants from FEMA. Read More

As part of a larger agenda that aims to increase hurricane mitigation through targeted persuasive messaging, we conducted two formative research studies in the hurricane at-risk states of Alabama and Florida. Read More

In the second part of this two-part series, we offer the final two insights from the recent release of NFIP microdata. This data has enabled a closer look at the NFIP program, providing an overview of flood risk in the United States and the challenges of flood risk management. Read More

At the beginning of last summer, FEMA released a wealth of historical data on flood insurance in the United States. The recent release of NFIP microdata has enabled a closer look at this program, providing an overview of flood risk in the United States and the challenges of flood risk management. Read More

Given that municipal bond repayment often comes from local property tax revenues, some investors and rating agencies are growing concerned about whether these investments could be at risk if property values decline due to disaster events and/or unmitigated sea-level rise. Read More

Hurricanes and tornadoes are newsworthy because these storms have the potential to disrupt communities with casualties and high economic losses. Read More

This year, the Wharton Risk Center and the Insurance Information Institute once again teamed up to sponsor a “Hack-for-Resilience” at PennApps. Prizes were awarded to the teams with the best overall Hacks-for-Resilience and the teams that made the best use of “Insurtech” to advance resilience. Read More

One step to start encouraging local governments to pay more attention to disaster costs is a community resilience policy score. This could be used by insurers to offer more competitive rates in higher scoring areas, by rating agencies in assessing bond ratings for hazard-prone locations, or by FEMA in allocating disaster aid. Read More

To effectively reduce federal exposure to disaster losses and simultaneously encourage local governments to better manage their risk and invest more in cost-effective risk reduction measures, FEMA should widely eliminate assistance for the repair and reconstruction of public buildings, exempting small and financially challenged communities that would not otherwise recover. Read More

As climate change continues to influence extreme events, the role of insurance in adapting to these changes is becoming an increasingly important topic. In theory, insurance has a critical role to play in promoting disaster resilience. However, empirical papers cleanly identifying the relationships between insurance and recovery and mitigation outcomes is surprisingly limited. Read More

The CBRA prohibits federal financial assistance related to new development in designated coastal barrier areas, forcing private actors to bear the full costs of development. Could a similar approach be used to address escalating wildfire costs? Could Congress designate a “High Wildfire Hazard Resources System” to eliminate federal incentives to develop those lands? Read More

When PG&E filed for bankruptcy protection in January, several observers declared the electric utility the first casualty of climate change. But as much as global warming is to blame for PG&E’s financial woes, state policy is equally responsible. Read More

In October 2018, the Wharton Risk Center’s Policy Incubator hosted a workshop designed to evaluate policy options for expanding the number of people with flood insurance in the United States. In our most recent issue brief, we present seven approaches that workshop participants felt had the potential to generate substantial increases in take-up rates across ...Read More

Households face a high-stakes problem in selecting an insurance contract. How much coverage should they buy? What deductible should they choose? The household must weigh premiums paid today against losses from an unlikely – but possibly catastrophic – future event such as a flood. Often, the household has never experienced the insured event and may ...Read More

In a new issue brief, we examine Portland’s Flood Insurance Savings Program in detail, discussing its structure, participants, and impact on flood insurance premiums. We also identify lessons learned that may be useful to other communities struggling with flood insurance affordability and to policymakers considering NFIP reform. Read More

The University of Pennsylvania is home to the world’s first and one of the largest student-run hackathons. Over one weekend in early September roughly 1,200 students converged for PennApps. Over 3,000 students had applied to attend. This year, the Wharton Risk Center’s Policy Incubator and the Insurance Information Institute teamed up to ...Read More

As residents of North Carolina deal with the impacts of Hurricane Florence, many communities in the United States are still recovering from the 2017 hurricane season, one of the most devastating in history. Read More

Florida homeowners are extremely vulnerable to flood damage, yet many of those at risk are uninsured. Drawing on our recent report, The Emerging Private Residential Flood Insurance Market in the United States, our newest issue brief describes the Florida market and the measures the state has taken to support its growth. Read More

While take-up rates in many parts of the country remain low for flood insurance, there are places where many households are insured and, surprisingly, places where most flood insurance is purchased outside of the FEMA-mapped high-risk areas. We offer three findings about residential NFIP purchases as demonstrated in three maps. Read More

For many people, their insurance agent is the person they turn to for advice on flood insurance. But many insurance agents do not understand flood insurance either. Last month, Oregon became the fifth state in the country to try and improve insurance agent understanding about flood insurance by creating a flood-specific continuing education requirement. Read More

How does coastal flood risk impact home prices? The answer depends, in part, on how buyers and sellers perceive flood risk. In a recent NBER working paper, Laura Bakkensen and Lint Barrage examine the potential impact of heterogeneous beliefs about flood risk on housing market price dynamics, given a hypothetical increase in flood risk. Read More

Drawing on our recent report, The Emerging Private Residential Flood Insurance Market in the United States, our newest issue brief describes the key players and structure of the residential flood market. Read More

One frequent challenge is that local government officials are reluctant to offer post-disaster housing buyout programs because buyouts can result in lost property tax revenue: if residents relocate into other jurisdictions and properties are kept as vacant lots, tax revenue falls.  While the potential loss of tax revenue necessarily plays a major role in local ...Read More

On June 14th, The Wharton Risk Center’s Policy Incubator received the Julio Castelo Matrán International Insurance Award from Fundación MAPFRE, a Madrid-based non-profit foundation committed to human well-being and social progress. Presented biennially, the €30,000 award recognizes projects that foster economic stability and solidarity through insurance and/or social protection. Read More

St. Louis’ Great Rivers Greenway (GRG) District oversees planning and execution of a network of trails and open spaces designed to link rivers, parks, and communities throughout the St. Louis region. Although not established with climate adaptation as an objective, this approach to conservation, often targeted at riparian corridors, has created natural infrastructure that ...Read More

Flood insurance in Puerto Rico has attracted media and policymaker attention since Hurricanes Irma and Maria devastated the island in late summer 2017. In a new issue brief, we examine recent trends in Puerto Rico’s residential flood market, documenting the flood insurance gap and examining the role of the private sector.  Read More

In a recent study, the Risk Center’s Howard Kunreuther and Marilyn Montgomery calculate structure-specific, risk-based flood insurance premiums for nearly 12,000 North Carolina homes and compare them to current NFIP rates. Their findings underscore the importance of developing accurate flood hazard maps to price insurance effectively and communicate flood risk. Read More

In undertaking the reauthorization of the NFIP, Congress should bear in mind two guiding principles for insurance.  In addition, with increased knowledge of consumer behavior, a behavioral risk audit provides strategies that will nudge and incentivize individuals to make decisions that will ultimately reduce their future flood-related losses. Read More

Last year set records for natural disaster damages in the United States.  NOAA estimates total damages from the 2017 events were over $300 billion.  The U.S. experienced not one, not two, but three land falling hurricanes.  Hurricane Harvey set a record for rainfall.  The wildfires in California were some of the costliest the state has ...Read More

Sea level rise threatens coastal communities around the world, but it is unclear if local governments and homeowners will be willing to invest in flood protection measures before it is too late. In a recent study, Co-Director Bob Meyer and colleagues explore the likely effects of sea level rise on South Florida’s adaptation efforts through ...Read More

SiriusXM Business Radio Powered by The Wharton School recently had a segment on the Cape Town water crisis.  Host Don Loney of the Knowledge@Wharton show discussed the current situation in Cape Town and what it tells us about the future of water in a changing climate with guests Carolyn Kousky of the Wharton Risk Center, Kevin ...Read More

Two goals should be at the top of our policy agenda: closing the disaster insurance gap and closing the risk reduction gap.  These gaps refer to the facts that many people do not have disaster insurance and much cost-effective risk reduction has not been undertaken. Read More

2017 proved to be one of the costliest disaster years on record.  Total damages in the US for the year are estimated to exceed $300 billion.  Insured losses for all natural disasters in 2017 will total around $135 billion. Do events like these cause (re)insurers to update their risk assessments?  How do firms, consumers, and government ...Read More

The National Flood Insurance Program (NFIP) is the predominant provider of flood insurance nationally.  Communities across the country can voluntarily join the program. In exchange for their residents being able to purchase federal flood policies, they must adopt minimum floodplain management regulations.  The program has grown since its founding in 1968 and now writes nearly ...Read More

Flood insurance takes a variety of forms around the world. To complement ongoing discussions about flood insurance reform, the Wharton Risk Center developed an interactive flood insurance market e-platform as part of the Zurich Alliance to compare residential flood insurance markets in 25 countries. Read More

Three exceptional hurricanes—Harvey, Irma, and Maria— caused staggering damages from floods, winds, and storm surge in recent weeks. It’s likely they will make the record books as the most costly natural disasters in US history. Although California doesn’t get hurricanes, it does get large storms (called “atmospheric rivers”) that can be just as damaging to ...Read More

Hurricane Harvey destroyed vital roads, public infrastructure, and hundreds of thousands of homes across Houston and southeast Texas. In Florida, Hurricane Irma has left communities reeling with widespread blackouts, severe coastal flooding, and crippled telecommunications systems. When floodwaters finally recede and the debris is cleared, recovery will be long. The Federal Emergency Management Agency (FEMA) will ...Read More

The first few days after a disaster, such as we have recently experienced with Hurricanes Harvey and Irma, are about emergency response: making sure people are safe, reuniting families, securing housing, filling necessities and restoring lifelines. But as days shift to weeks and then months and years, the slow process of rebuilding is undertaken. At ...Read More

As Texas begins the long process of recovery from Hurricane Harvey, and Florida braces for a possible hit from Hurricane Irma, too few victims will have the financial support of insurance payouts. Insurance should be a critical component of disaster recovery. Federal disaster aid grants are surprisingly limited, often not more than a few thousand ...Read More

As the long process of recovery begins for a devastated Texas, it is time to start thinking about how rebuilding can increase the resilience of the flooded households and communities. Incorporating risk reduction measures into rebuilding can often be more cost-effective when done as part of the repair process, and it also provides an opportunity ...Read More