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

Benjamin Dennis

No 2023-013, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

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.

Keywords: Climate-related risk; Financial stability; Flow of risk; Real estate loans (search for similar items in EconPapers)
JEL-codes: G20 Q54 R31 (search for similar items in EconPapers)
Pages: 56 p.
Date: 2023-02-13
New Economics Papers: this item is included in nep-env, nep-rmg and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2023-13

DOI: 10.17016/FEDS.2023.013

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