In the U.S., between 2020 and 2024, the total cost of major weather related disasters averaged about $150 billion per year. That’s more than five times the annual average during the 1980s, even after adjusting for inflation. At the same time as they’ve gotten more costly, major disasters have become more frequent. Inevitably, increasing losses have begun to strain property insurers. In some areas, like parts of California, premiums have gone up drastically. In some markets, insurance is now only offered through last-resort government-sponsored programs.

My guest today is Dr. Carolyn Kousky, an expert on disaster insurance and climate risk management. She has advised numerous communities on these subjects. Her many publications include the 2022 book Understanding Disaster Insurance: New Tools for a More Resilient Future. She’s taught courses on related subjects at the Wharton School of Business at the University of Pennsylvania. More recently she founded a nonprofit organization called Insurance for Good, and she currently serves as Associate Vice President for Economics and Policy at the Environmental Defense Fund.

I sat down with Carolyn to better understand the current and future points of failure in markets for insurance against weather disasters. I was interested to know what the broader consequences may be of a breakdown in those markets. I wanted to hear about what kinds of innovations or policy changes might help in this critical area of climate finance, which has the potential for such profound effects on households and businesses everywhere.

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