Insuring Extreme Heat Risks

December 2020

Extreme heat is a leading climate-related health risk, responsible for thousands of deaths and hospitalizations per year in the United States, a number that will grow significantly this century. But while extreme heat is similar in origin to other climate-related risks like wildfire, extreme weather, flooding, and drought, its impacts are especially diffuse and difficult to address: they fall primarily on individuals, rather than on physical property; they disproportionately affect vulnerable and disadvantaged communities; and they typically exacerbate existing health problems, making deaths and hospitalizations difficult to track.


Report cover
Report cover photo courtesy of Flickr user Florent Lamoureux

CLEE’s report, Insuring Extreme Heat Risks, studies the potential for insurance and other financial risk-transfer mechanisms to help local governments respond to and mitigate the extreme heat risk they will face with increasing regularity in coming decades. Local governments are developing resilience plans that include comprehensive extreme heat elements to help address the expansive risks posed by extreme heat, including not just physical health but also mental health, educational success, birth outcomes, worker productivity, transportation networks, and utility infrastructure.

These strategies have the potential to significantly cool urban areas, reduce harmful health outcomes, improve quality of life, and generate significant cost savings for society. But they need policy and financial support to get off the ground. Insurance, and the broader category of financial risk transfer, may have the potential to provide both the capital and the coordination structure necessary.

Our report identifies a group of risk transfer innovations that could be developed to support extreme heat mitigation and response, through a potential framework including:

  • Development of a comprehensive local extreme heat plan including appropriate components across natural, built, social, communications, and planning infrastructure.
  • Analysis of financial implications of heat plan implementation including the cost of mitigation investments and responses; anticipated temperature reductions; expected health impact of social and communications investments; and estimated savings generated by these measures.
  • Certification of the heat plan through a model “performance contract” that identifies necessary plan components and monitors achievement of key milestones and adherence to recurring plan elements.
  • Establishment of a local heat vulnerability index including multiple trigger points at different daytime and overnight temperatures and time periods in multi-day extreme heat events.
  • Creation of an insurance policy with payouts linked to heat triggers, vulnerability indicators, and appropriate responses from the heat plan, to provide financial support where and when it is most needed.
  • Provision of premium discounts or other subsidies for investment in and maintenance of long-term heat mitigation infrastructure.


Download the report here. 

Contact Ted Lamm or Ethan Elkind for more information.