Shifting Shores: Policy Recommendations for Sustainable and Equitable Insurance Markets in a Changing Climate – A Florida Case Study

By Kevin Larson Mohr

Image selected by Lia Bote


This paper delves into the challenges confronting Florida’s property insurance market due to climate change impacts, emphasizing the need for policies that champion resilience and adaptation. Through rigorous literature review and analysis, this paper delineates the crucial components for crafting such policies, encompassing climate adaptation measures, financial incentives for risk reduction, and equity considerations. Drawing from these, the paper proposes policy recommendations, offering insights for other coastal regions grappling with analogous risks.

Science to Policy Statement

Understanding the insurance market’s influence on coastal area development is essential for grasping society’s adaptation to climate change risks. This paper’s issues aim to elucidate how future insurance policymaking should consider the challenges society faces due to climate change, focusing on equitable solutions that address displacement and other social challenges.

Key Words

Natural Disaster Insurance, Sea Level Rise, Climate Change, Climate Risk


Florida, with its vast coastline, faces unparalleled challenges from climate change due to its vulnerable location. Rising sea levels, intensifying storms, and increasing flood risks have heightened concerns about the resilience and sustainability of coastal communities. As the frequency and severity of climate-related events escalate, property insurance markets play a critical role in promoting climate resilience by providing financial protection and incentivising risk reduction measures.

This paper explores the challenges and opportunities for Florida’s property insurance market in the context of a changing climate, focusing on the need for comprehensive, equitable, and sustainable policies that protect vulnerable populations while ensuring market stability. To achieve these objectives, the paper delves into the current state of the market, identifies key
components for sustainable and equitable insurance policies, and proposes a set of policy recommendations that can help guide the transformation of the insurance landscape in Florida.

By examining the intricate interplay between insurance markets and climate change adaptation efforts, this paper seeks to contribute to the broader discourse on climate resilience and sustainable development. The Florida case serves as a model for other areas facing similar threats. The strategies and solutions identified in the context of Florida can be extrapolated to other regions offering a systematic approach and offering valuable insights into effectiveness. As a region facing immediate climate risks, the lessons learned in this context will be valuable to other regions in the future as the coastal landscape evolves.

Challenges in Florida’s Property Insurance Market

Florida’s property insurance market faces unique challenges due to the state’s vulnerability to climate change-related risks, particularly in coastal regions. As a result, both policyholders and insurers are confronted with complex and evolving issues that require innovative solutions and policy interventions.

Overview of the Market

Florida’s property insurance market is one of the principal drivers of development in the state [13]. Florida is a low-lying coastal region where most of the development has occurred directly adjacent to the ocean which surrounds the peninsula-shaped state, making it particularly vulnerable to Sea Level Rise (SLR). But property and storm insurance has been readily available due to the state’s investment in public insurance options such as the Citizens Property Insurance Corporation, and the federal National Flood Insurance Program (NFIP). These programs together have made development particularly attractive in lowlying coastal areas that otherwise would not be insurable due to their high risk-level. But, the increasing frequency and severity of extreme weather events (EWE), coupled with the ongoing threat of SLR, have strained the market, leading to concerns about its long-term viability and resulting effects on the state’s growth [19].

This policy-created, but existential problem is exacerbated by the effects of climate change (CC), which has intensified the risks associated with property insurance in Florida, with recent projections indicating that 2.4 million properties are at risk of flooding due to sea-level rise by 2100 [9]. Moreover, research suggests that hurricanes are becoming more intense, frequent, and slower, exacerbating the challenges faced by insurers and policyholders alike [11]. The increasing magnitude of these risks has prompted concerns about the financial stability of the insurance market and its ability to adequately protect vulnerable communities [15].

Vulnerable populations and affordability concerns. As the risks associated with CC become more acute, affordability issues have emerged as a significant challenge for low-income and marginalised communities in Florida, who are disproportionately affected by environmental hazards [18]. Insurance premiums, which refer to the amount paid periodically to insurance companies by individuals for covering their risk, are on the rise. As a result, these populations face a growing risk of being priced out of the market, exacerbating existing socioeconomic disparities, and increasing the potential for displacement [20]. This situation underscores the importance of implementing equitable and sustainable insurance policies that address the needs of vulnerable populations while fostering climate resilience.

Key components for sustainable and equitable insurance policies

In the face of these escalating CC related risks, developing sustainable and equitable insurance policies is essential for promoting resilience and reducing the vulnerability of coastal communities like Florida. Ultimately, a holistic approach is needed that accounts for increasing risk, the inevitability of relocation, and ensuring displacement is minimised.

This section discusses three key components that should be integrated into insurance policy development to ensure a more resilient and inclusive insurance market that can be adapted to other locales. Integrating climate adaptation measures. Incorporating climate adaptation measures into insurance policies can help reduce risks and protect communities from the adverse impacts of climate change [10]. For instance, risk reduction measures such as improved building codes, resilient infrastructure, and land-use planning can significantly mitigate the impacts of hurricanes and flooding [6]. By incentivising the adoption of these measures at a local level, insurers can encourage policyholders to invest in climate-resilient practices, ultimately reducing the burden on the insurance market and improving overall community resilience[3].

Developing financial incentives for risk reduction. Financial incentives, such as premium discounts, can play a pivotal role in promoting risk reduction measures among property owners [14]. For example, the National Flood Insurance Program (NFIP) in the United States offers discounted premiums to policyholders who take steps to reduce their flood risk, such as elevating their homes above the base flood elevation [12]. By implementing similar financial incentives, insurers can encourage property owners in Florida to invest in climate adaptation measures, helping to reduce overall risk and promote a more sustainable and resilient insurance market.

Ensuring equity and sensitivity in policy development. Addressing issues of equity and social justice in insurance policy development is crucial for protecting vulnerable populations and ensuring that the benefits of climate resilience are shared equitably [1]. This can be achieved by implementing policies that balance affordability and accessibility for low-income and minority communities, who are often disproportionately affected by climate change impacts [18]. Additionally, incorporating displacement and other social challenges into policy development can help address potential negative consequences associated with climate change-induced migration and promote a more just and inclusive insurance market [7].

Policy Recommendations

To address the challenges facing Florida’s property insurance market and promote climate resilience, the following policy recommendations are proposed. These recommendations aim to create a more sustainable and equitable insurance market that effectively accounts for future climate risks and ensures inclusive policymaking.

Enhancing risk assessment methodologies. Accurate risk assessment is crucial for the development of sustainable and equitable insurance policies. Improved methodologies that incorporate the latest CC projections and SLR estimates can help insurers better understand and price risks associated with climate change [16]. By integrating cutting-edge climate science and data into risk assessment practices, insurers can develop policies that more accurately reflect the changing risk landscape and promote effective adaptation measures [2]. Furthermore, it’s essential to consider risk assessments that recognise displacement as a consequence. Such assessments can address the trend where wealthy landowners relocate from high-risk areas to more affordable regions. This movement can lead to increased property values and rent prices, resulting in conflicts with existing residents and the eventual displacement of less affluent individuals, a phenomenon commonly referred to as gentrification.

Encouraging public-private partnerships. Public-private sector collaboration can lead to innovative insurance solutions, addressing the multifaceted challenges of climate change [4]. Public-private partnerships can help pool resources, share knowledge, and develop targeted policies that promote climate resilience while ensuring market stability [21]. For example, the Florida Hurricane Catastrophe Fund, a state-run reinsurance program, has provided stability to the property insurance market by sharing hurricane risk with private insurers [8]. Expanding such collaborative efforts can contribute to the development of more robust insurance policies that are better equipped to manage climate risks. At the federal level, the Federal Emergency Management Agency (FEMA) and other agencies must find ways to create locally sensitive policies which can be adaptable and strengthen local institutions.

Implementing innovative financial mechanisms. Innovative financial mechanisms can help address affordability concerns and promote risk reduction efforts. For example, updating assumptions on catastrophe (cat) bonds can benefit insurers. These bonds transfer risk to capital market investors, offering insurers more capacity and market stability [5 Similarly, parametric insurance offers pay-outs based on set triggers like wind speed. This provides quick financial relief to policyholders after natural disasters, boosting their resilience [17]. Insurance-Linked Securities (ILS) are financial instruments sold to investors, with their value affected by an insured loss event such as a storm, which enables insurers to offload risks to the capital markets. Weather Derivatives are financial contacts that allow businesses, like farmers, to hedge against specific weather-related risks, such as insufficient rainfall. Lastly, microinsurance is tailored for low-income individuals, offering coverage for specific perils at a low premium, acting as a resilience-enhancing tool in vulnerable communities. By adopting and promoting such financial mechanisms, insurers can help ensure the continued availability of insurance coverage in high-risk areas while promoting adaptation measures to encourage movement towards lower-risk areas.

Establishing a regulatory framework for equitable and sustainable insurance practices. A comprehensive regulatory framework that encourages equitable and sustainable insurance practices is essential for promoting climate resilience. This framework should include policies that promote transparency, encourage risk reduction measures, and directly address displacement, and affordability concerns among vulnerable populations [15]. Insurers must be mandated to provide clear, understandable information about climate risks. This includes not only the potential damages and losses but also the mitigation measures that policyholders can adopt. By being well-informed, policyholders can make decisions that align with both their personal interests and broader climate resilience goals [19]. Insurers must be mandated to provide clear, understandable information about climate risks. This includes not only the potential damages and losses but also the mitigation measures that policyholders can adopt. By being well-informed, policyholders can make decisions that align with both their personal interests and broader climate resilience goals. Additionally, they can establish guidelines for premium rate-setting that balance risk-based pricing with affordability concerns [13]. Insurers must be mandated to provide clear, understandable information about climate risks. This includes not only the potential damages and losses but also the mitigation measures that policyholders can adopt. By being well-informed, policyholders can make decisions that align with both their personal interests and broader climate resilience goals. Lastly, given the dynamic nature of climate change and its impacts, the regulatory framework should be inherently adaptable. As populations shift, either due to economic reasons or climate-induced migrations, regulations should be flexible enough to accommodate these changes.

By meticulously crafting and implementing such a regulatory framework, policymakers can ensure a stable and inclusive insurance market. This stability is crucial, especially as the world grapples with the multifaceted challenges posed by climate change.


The challenges posed by climate change in Florida’s property insurance market necessitate a comprehensive approach to developing sustainable and equitable insurance policies. By integrating climate adaptation measures, offering financial incentives for risk reduction, and ensuring equity and social justice in policy development, Florida’s insurance market can
be better equipped to address the impacts of CC and promote resilience among its diverse coastal communities. This paper has overviewed a set of policy recommendations that can contribute to the transformation of the insurance market in Florida. Enhancing risk assessment methodologies to incorporate the latest climate science, encouraging public-private partnerships, implementing innovative financial mechanisms, and establishing a regulatory framework for equitable and sustainable insurance practices are key components for policymakers, insurers, and other stakeholders to create a more resilient and inclusive insurance market that effectively accounts for future climate risks. Florida’s experience offers salient lessons for other coastal regions and countries grappling with analogues challenges. As climate change continues to exacerbate natural hazards such as hurricanes and flooding, the importance of developing robust insurance policies that promote resilience and sustainability becomes increasingly critical. The experience of Florida serves as a reminder that the responsibility for building climate resilience lies not only with individuals or businesses but also with the policymakers and regulators who shape the insurance market.

It is increasingly crucial for all stakeholders involved in the insurance market – from policymakers and regulators to insurers and property owners – to collaborate and address the challenges posed by climate change. By embracing a holistic approach to policy development that accounts for displacement and other social challenges arising from climate change, the insurance market can serve as a vital component in promoting climate resilience and sustainable development.

By proactively addressing the challenges and embracing the opportunities presented by climate change, stakeholders can work together to ensure a more resilient and secure future for all Floridians This paper accentuates the urgency for sustained scholarly inquiry, discourse, and proactive engagement amongst policymakers, insurers, and other stakeholders to adeptly navigate the evolving landscape of climate change and its implications for the property insurance sector.


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About the Author

Kevin Larson Mohr

Mr Kevin Larson Mohr is a MPhil graduate of the University of Cambridge (Selwyn College ’23) in urban studies, whose research interests lie at the intersection between climate risks, socio-political responses, and urban environments. He regularly employs robust statistical modelling, spatial analysis, qualitative methods, and policy analysis in his work. Mr Larson Mohr is now a PhD student at the University of Miami Rosenstiel School in Environmental Science and Policy working on research to build collaborative flood modelling platforms with a focus on South Florida.


Corresponding address:

Conflict of interest: The author declares no conflict of interest.