Insuring Disaster: Developing High-Resolution Models of the Economic Consequences of Disasters to Improve Insurance Pricing

PI: Nicholas Mark, assistant professor of Sociology

Co-Investigators:

Max Besbris, associate professor of Sociology

Beth Tellman, assistant professor of Environmental Studies

Philip Mulder, assistant professor of Risk and Insurance

Jonathan Sullican, assistant professor of Environmental Studies

Megan Bea, associate professor of Consumer Science

Description: Disasters and severe storms financially affected more than one in five U.S. households in 2024, yet the insurance industry and government stakeholders lack the real-time, high-resolution economic data needed to adequately price climate risk. This project brings together an interdisciplinary UW–Madison team to develop a foundational framework for climate-resilient finance.

The project will produce the first causal estimates of how flood disasters disrupt household consumption by merging proprietary real-time consumer spending data with AI-derived satellite flood data and federal insurance and disaster aid records. The project will also estimate flood impacts on household expenditures, assess how insurance coverage and disaster aid moderate those effects, and construct economic loss-to-hazard frequency curves that can be used to develop innovative insurance pricing instruments and targeted post-disaster policies. The project framework is designed to attract future funding from NSF, NASA and private-sector insurance partners, positioning UW–Madison as a leader in climate finance innovation.