Boomhauer: Capital is persistently failing to enter reinsurance markets
Dr. Judson Boomhauer · How climate disasters are shaping insurance markets · Apr 10, 2025 · at 32:26
Environmental economist Dr. Judson Boomhauer explains capital supply bottlenecks in catastrophic climate risk and reinsurance markets.
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“If you look at people that study reinsurance, they're, the persistent fact is there's not a lot of capital entering these markets”
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More from Dr. Judson Boomhauer
Boomhauer: Major property insurers are not expected to fail near term
“We're not at the point yet where You know, we expect major failures of property insurers.”
Boomhauer: Proprietary insurer catastrophe models are impossible for objective third-party evaluation.
“Almost all of the models that are applied by insurers today are developed by for-profit private companies. It makes them all a little bit of a black box. It makes them all basically impossible for objective third parties to evaluate”
Boomhauer: Rising frequency of outlier weather events stresses insurance markets
“We've I think, and it's also not so much Any individual exceptional event, it's the rate at which the exceptional events are coming, right? We're having a lot of them things that used to be complete outliers are happening with greater and greater frequency, an…”
Boomhauer: Property insurance prices will rise and carrier equity returns will suffer.
“What is likely in the short run is that prices are going to need to go up. Returns to the equity investors in these companies that, that have equity investors are not going to be good.”
Boomhauer: Insurer market withdrawals are ad-hoc reactions to imperfect disaster data
“There is also absolutely a sense of kind of reactiveness here that something bad happens and let's get out of the place where the bad thing is happening. And that I agree that there's this ad hoc, a little bit of an ad hoc sense to it, but fundamentally I thin…”
Boomhauer: Limited liability creates a moral hazard for insurers against buying reinsurance.
“One question that you might ask if you're an insurance company is, well, reinsurance is expensive and difficult to buy. Why should I care if I, as a company can't pay my claims in a given year, then I'm going to go bankrupt and that's terrible for my policyhol…”