Article Highlight | 4-Nov-2025
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Moran Nabriski
Credit: Tel Aviv University
Insuring the Future: The Insurance Industry’s Role in Climate Change Mitigation”
Global warming and extreme weather are changing the rules of homeowners’ insurance across the globe. In the United States, as a result of increasing damages from floods, the federal flood insurance program (NFIP) is making significant changes to reduce costly public subsidies for climate risks – a move that raises prices for the public, reduces availability of insurance, and can ripple through to real estate market.
A new study published in Humanities and Social Sciences Communications (Nature Portfolio), examines how the effects of climate change on hurricanes is expected to affect profitability in the U.S. homeowners’ insurance market. The study, led by a team of scientists at Tel Aviv University, proposes an alternative strategy: proactively channeling the anticipated losses to the insurance industry into climate-mitigation investments. The research was conducted by a joint team from Tel Aviv University, Max Stern Yezreel Valley College, and University of Haifa, including PhD student Moran Nabriski from the Department of Environmental Studies and Prof. Colin Price from the Department of Geophysics, both at Tel Aviv University, and Dr. Ruslana Palatnik from the University of Haifa.
Insurance is a major economic force with a dual role; on the one hand it is a risk manager, and on the other a large institutional investor with long-duration capital. Given its systemic weight – and because insurance is fundamentally a pooling mechanism that links economic sectors – the study calls for the industry to be a proactive partner in addressing climate change. It should not only react to extreme events but also reduce risk at its source (akin to building-safety standards that prevent fire losses).
Combining a market-equilibrium model with climate-driven hurricane damage projections, the study finds that industry profitability could erode by roughly 11%–100% across modeled scenarios, alongside higher premiums and reduced coverage. Channeling that expected erosion into emissions-reduction investments illustrates the sector’s unique ability to aggregate resources across the economy. The potential mitigation impact could materially exceed the insurance sector’s direct share of economic activity.
“Insurance is commonly viewed as a tool for transferring risk over time and across geographies, yet natural disasters occur in the same places at the same time,” said lead author Moran Nabriski. “As natural disasters intensify, the insurance industry should represent the economy not only as a responder to a changing climate, but also as a leader in confronting it. Because insurance connects all sectors of the economy, it can leverage that position into a coordinated effort with a meaningful impact on climate risk.”
The study offers a quantitative tool for assessing future costs and shows how insurers’ long-term capital can serve as a climate-finance engine – alongside traditional pricing and risk management.
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