Inclusive Insurance:

The Wharton Risk Center’s Policy Incubator is honored to have received a Stage 2 Civic Innovations Grant from the National Science Foundation (NSF), in partnership with the Department of Energy and the Department of Homeland Security.  The Civic Innovation Challenge is a research and action competition to fund ready-to-implement, research-based pilot projects that have the potential for scalable, sustainable, and transferable impact on community-identified priorities.

Our Motivation

The mid-Atlantic region of the United States, including New York City, is experiencing accelerated rates of sea level rise, increasing flooding. The likelihood of experiencing flooding is greater for lower-income residents, with those in NYC floodplains tending to be working and middle class homeowners. Unfortunately, low- and moderate-income households in the US struggle with access to the needed financial resources to recover. Financial resilience—the ability to recover from an economic shock—underpins other aspects of recovery and is a necessary condition for broader urban disaster resilience. Despite this, it is an under-researched aspect of climate adaptation. And while there has been some work documenting the problems, actionable investigation of solutions is scarce. Our project is designed to fill this gap.

This video was created as part of Stage 1 of the Civic Innovations Challenge.

Our Project

The project’s overarching goal is to increase the financial resilience of low- and moderate-income households in New York City to escalating flood risk through the use of inclusive insurance. Inclusive insurance refers to any program or policy that makes insurance coverage available to those previously locked out of the insurance market. Internationally, there has been a growing movement to identify low-cost insurance designs and establish public-private partnerships that can guarantee a more equitable recovery, however, these innovations have yet to be widely adopted in the US. Our project will establish NYC as one of the first local governments in the US to harness these approaches.

This project is a joint effort between the Wharton Risk Center at the University of Pennsylvania, the New York City Mayor’s Office of Climate Resiliency (MOCR), and the Center for New York City Neighborhoods (CNYCN). It also involves research and development work with Global Parametrics, technical assistance from Guy Carpenter, and support from the NYC Office of Management and Budget. Our work will be informed by an advisory board of subject-matter experts.

Stage 1 Results

The team used Stage 1 as an idea accelerator to examine half a dozen innovative, inclusive insurance interventions and to identify which would be most impactful, implementable, and sustainable. The intensive process involved more than 30 semi structured expert interviews, exploratory analyses, stakeholder engagement, and consultation with our advisory board.

Our team released an Issue Brief in January 2021 as part of the Stage 1 grant, “Improving the Post-Flood Financial Resilience of Lower-Income Households through Insurance.”  This brief is intended to help policymakers begin the conversation about what new or supplemental policies could help low- and moderate-income households in at-risk areas.

Stage 2 Components