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Household, Bank, and Insurer Exposure to Miami Hurricanes: a flow-of-risk analysis

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Abstract

We analyze possible future financial losses in the event of hurricane damage to Miami residential real estate, where the hurricane's destructiveness reflects climate-change. We focus on three scenarios: (i) a business-as-usual scenario, (ii) a Hurricane-Ian-spillovers scenario, and (iii) a cautious-markets scenario. We quantify bank exposures and loss rates, where exposures are proportional to the size of real estate markets and loss rates depend on post-hurricane devaluations and insurance coverage. This quantitative methodology could complement modeling of local economy impacts, stress on public finances, asset market losses, and other financial developments that will also affect banks.

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  • Benjamin Dennis, 2023. "Household, Bank, and Insurer Exposure to Miami Hurricanes: a flow-of-risk analysis," Finance and Economics Discussion Series 2023-013, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2023-13
    DOI: 10.17016/FEDS.2023.013
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    References listed on IDEAS

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    More about this item

    Keywords

    Climate-related risk; Financial stability; Flow of risk; Real estate loans;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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