Principles for Resilient Homes Grant Programs
By Elyse Schupak and Carly Fabian
Climate change is destabilizing property insurance markets, with $30 billion a year globally in insured losses now attributable to climate change. Insurance companies are raising rates and retreating from climate-vulnerable communities, financially straining homeowners, renters, and housing providers and increasing the risk of broader financial instability. This crisis requires ambitious government intervention and investment to advance climate mitigation and adaptation. It also requires action from the insurance industry. Rather than offload growing risks and costs onto households, communities, and governments, insurers should invest in risk reduction to promote the availability of high-quality insurance at affordable rates.
State governments, as the primary regulators of insurance, can facilitate this investment through fees and taxes on insurers that fund grants to homeowners, nonprofit organizations, and housing providers for fortified roof upgrades and property-level wildfire and flood mitigation. While proven solutions can lower costs by reducing risk, many households need upfront financial support. Ten states and counting have created grant programs to fund property-level climate resilience, and numerous additional states have introduced legislation to follow suit.
This paper offers five sets of recommendations for states pursuing resilience grant programs:
- States should set up robust retrofit grant programs that meet local needs with adequate funding from the insurers who benefit from resilience investments.
- Grants should be targeted toward the communities in greatest need of financial assistance for risk mitigation.
- States should ensure that resilience investments result in cost savings and other benefits for policyholders.
- States should build towards whole-home retrofit programs inclusive of energy efficiency and emissions reduction projects.
- States should target long-term success through comprehensive resilience and mitigation strategies.