Graduation Year

2024

Date of Submission

12-2024

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

David bjerk

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

Janeiro M Lettries

Abstract

California’s property and casualty insurance market is facing a crisis that is being driven by climate change, escalating wildfire risks, and regulatory constraints. This literature review explores how the increasing frequency and severity of wildfires have destabilized the state's insurance industry. The crisis is exacerbated by human development in the wildland-urban interface (WUI). by analyzing economic, environmental, and regulatory factors, this literature review identifies systemic challenges such as adverse selection, moral hazard, and market failure. The role of state-based insurance programs like the California FAIR plan, as well as possible risk reduction mechanisms are examined as potential solutions.additionally, this research evaluates advanced risk modeling, behavioral economics, and climate adaptation strategies as a comprehensive approach to stabilizing California Property and casualty insurance market amidst mounting climate risks. The findings suggest the need for integrated solutions; combining regulatory reform, innovative risk management, and community engagement.

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.

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