Pricing of Climate Risk Insurance: Regulation and Cross-Subsidies

• 成果类型: Article
• 署名作者: Oh, Sangmin S.; Sen, Ishita; Tenekedjieva, Ana-Maria
• 署名单位: Columbia University; Harvard University; Centre for Economic Policy Research - UK; Arizona State University; Arizona State University-Tempe
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082; 1540-6261
• DOI: 10.1111/jofi.70029
• 发表日期: 2026-06
• 关键词: disaster; MARKETS

摘要

Homeowners insurance is central to managing the rising losses from climate-related disasters. We show that insurance premiums are subject to starkly different regulations across states, creating persistent cross-subsidies and price distortions. We employ states' regulatory rules in an instrumental variable estimation and a border discontinuity design to show insurers do not adjust rates in highly regulated states and compensate by raising rates in less regulated states. Rates and risks diverge in the long run, distorting cross-state risk-sharing and increasing insurer exits from highly regulated states. We argue these patterns stem from the interactions between rate regulation and insurers' financing constraints.