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My research question, “Should natural disasters and hurricanes impact housing insurance rates?” was posed because it reflects my concern for the future of housing affordability and stability in the face of increasing climate-related disasters. As someone who will very soon be forced to find a home, this subject is incredibly important to me. Living in New Jersey, I’ve witnessed the rising threats of hurricanes, wildfires, and even droughts – events that once seemed distant but now impactful and actively happening. My interest comes from my personal experience but also my desire to understand how these events shape economic stability for people like me and the community in general. Going into this project, I had no prior knowledge about subject matter like this, but as climate risks increase, particularly for our home state of New Jersey, it’s really important to understand if the traditional methods of insurance rates are sustainable or if they need to evolve to address our changing environment.

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One aspect of the topic that was interesting to me was the difficulty of balancing financial sustainability for insurance companies while keeping in mind the fairness for homeowners who have to deal with the uncontrollable climate risks. The first article that I read by Mackenzie Thurman, "Fighting Fire with Fire-Hardened Homes: The Role of Electric Utilities in Residential Wildfire Mitigation," offered a significant perspective. She suggests that in California, where wildfires have destroyed dozens of homes, that there should be a shift from merely raising premiums, but instead that “utilities should be required to retrofit their lowest-income customers’ homes to fire-hardened standards in high-risk areas" to reduce overall wildfire-costs, which would allow insurance to not be the only solution to managing risk. This concept would apply to New Jersey too because it raises the question of what things could we implement which would reduce the financial burden of both insurers and homeowners.

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To build on this idea, I also read "Climate Gentrification in Miami: A Real Climate Change-Minded Investment Practice?" by Han Li and Richard J. Grant, which covered home climate change concerns in Miami have led to this trend called “climate gentrification”. This basically means the concept of where people seek higher ground to escape rising sea levels, which impacts housing prices and displacement in specific areas. They argue that while climate change is a reason for this happening, there’s other socio-economic forces also causing it. They say that, "the idea that gentrification is fueled by climate change in Miami doesn’t match reality" which directly relates to my question because it shows how climate risks can disrupt housing affordability beyond just insurance costs, showing a different perspective behind how whether or not rising rates are an inevitable response to disaster risk or if they might be influenced by broader, multi-layered force in the housing and insurance markets.

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Lastly I considered an article from Insurance Journal which discussed the rise in housing insurance due to the increase of natural disaster frequency across the U.S. It basically explained how “insurers are being forced to raise premiums or withdraw from high-risk markets to remain solvent”. This underscored the tension of my question however, because it emphasized the challenges that insurers face in balancing risk with affordability, especially in vulnerable communities (such as Miami’s “Little Haiti”).

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Overall, these sources raised some sub-questions I could ask about things like responsibility and sustainability in the face of climate change: Should only insurance companies bear the financial burden, or should other entities, like government agencies or utility companies contribute? Also, as insurance costs rise, what policies can prevent economic displacement? These questions and more could be asked based on my core question, and shows the role of different concepts coming together to create a future for homeowners in vulnerable areas, starting right here in New Jersey.

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Thurman, MacKenzie. "Fighting Fire with Fire-Hardened Homes: The Role of Electric Utilities in Residential Wildfire Mitigation." Columbia Law Review, vol. 122, no. 4, 2022, pp. 1055-1094.

Li, Han, and Richard J. Grant. "Climate Gentrification in Miami: A Real Climate Change-Minded Investment Practice?" Cities, vol. 131, Dec. 2022, p. 104025.

Insurance Journal. "Insurers Forced to Raise Premiums or Withdraw from High-Risk Markets Due to Natural Disasters." Insurance Journal, 2023.

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