Climate-Induced Migration Patterns and Property Insurance
June 2025
Authors
Chia-Chun Chiang
Greg Niehaus
Executive Summary
The increase in the frequency and severity of natural disasters due to climate change impacts the costs and benefits of living and working in various parts of the United States. As a result, people are likely to migrate from areas that have greater exposure to natural disasters to areas that have less exposure to natural disasters, which could affect property insurance markets in both areas.
This research project examines the net movement of people into and out of the state following the occurrence of a natural disaster in the state. We find that, after controlling for other factors that influence migration rates, major natural disasters in one year are associated with lower net migration into the state in the subsequent year. In other words, the evidence suggests that, on average, more people move out of a state and/or fewer people move into a state following major disasters. Regarding the magnitude of the estimated effect, the occurrence of a major natural disaster in one year is on average associated with a 0.2% decline in a state’s net migration rate in the subsequent year.
This project also examines whether the estimated sensitivity of migration rates to natural disasters varies across states based on the state’s overall exposure to disasters as measured by the frequency and severity of disasters in the state during the sample period. It was not found that the sensitivity of migration rates to disasters varies across states on these dimensions. It was also not found that the sensitivity of migration rates to disasters during the 2005-2013 time period differs from the 2014-2023 time period.
Case studies were conducted of five major insurer groups operating throughout the U.S. to identify how they are impacted by natural disasters. Specifically, the analysis examines whether state-level annual loss ratios for homeowners of the five insurers are related to the occurrence of a major disaster in the state in the prior year. The analysis finds that state-level loss ratios for homeowners are generally not sensitive to the occurrence of FEMA declared disasters in the prior year. The analysis does find, however, that loss ratios are higher on average in states with more restrictive rate regulation.
The study further investigates the five insurers by examining how their homeowners’ loss ratios and premium rates respond to the six largest state-level disasters during the sample period. On average, the analysis finds that these five insurers’ state-level homeowners’ loss ratios decrease following the largest six disasters during the sample period. Possible explanations include (1) insurers restrict coverage to the properties that are most at risk, and (2) lower than average losses just happened to occur after these six major disasters.
The report ends with a brief discussion of insurance policy changes that could potentially help homeowners’ insurance market participants (insurers and property owners) deal with climate change issues. More specifically, the discussion addresses the pros and cons of index and parametric triggers, as well as the implications of having longer-term policy terms.
Material
Climate-Induced Migration Patterns and Property Insurance
Acknowledgements
The researchers’ deepest gratitude goes to those without whose efforts this project could not have come to fruition. We especially thank the Project Oversight Group for their diligent work overseeing, reviewing, and contributing ideas to the report. We especially appreciate the work of Robert Montgomery who kept us on schedule and made numerous helpful suggestions. Any errors belong to the authors alone.
Project Oversight Group members:
Jay An, ASA
Amanda Chiang, ASA
Bronwyn Claire, PhD
Sam Gutterman, FSA, FCAS, MAAA, CERA, FCA, HonFIA
Michael Reis, FSA, CERA, JD
Loic Seniadja, ASA
Shariq Sikander, FSA, CERA
Jianxi Su, FSA, PhD
Yi Xie, ASA, CERA
At the Society of Actuaries Research Institute:
Rob Montgomery, ASA, MAAA, Research Project Manager
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