Climate-Driven Real Estate Risk and Threats to Financial Security RFP
Background and Purpose
Physical climate perils are a major driver of real estate losses with direct and growing implications for households and institutional asset portfolios. For example, in the United States:
- The January 2025 Southern California fires destroyed at least 16,264 structures and damaged another 2,051 properties.[1] This resulted in direct economic loss costs exceeding $65 billion. The insurance industry covered an estimated $41 billion of that total. [2] These made them the costliest wildfire event in U.S. history. Prior to the fires, more than 100,000 Californians had lost private homeowner’s insurance since 2019 as major carriers withdrew from the state[3]
- The 4 July 2025 Central Texas flash floods caused an estimated $1.1 billion in damage. With National Flood Insurance Program (NFIP) take-up estimated to be at or below 5%, the overwhelming majority of losses fell directly on households rather than insurers.[4] [5]
- Separate from any single hurricane or flood event, severe convective storms encompassing tornadoes, hail, and straight-line winds produced at least $50 billion in U.S. insured losses annually for three consecutive years (2023-2025).
- While 2025 saw no US hurricane landfalls, the 2024 season demonstrated the scale of exposure. The hurricanes “Helene” and “Milton” were very costly with Helene alone generating more than $30 billion in estimated damages as the storm's catastrophic inland flooding struck across the southern Appalachians.[6]
These losses are not contained to property/casualty insurers or the homeowners. The secondary and longer-run effects propagate directly into households and the balance sheets of financial institutions, such as:
- Residential real estate (RRE) / home equity is a primary financial asset for households in developed economies and a key component of retirement wealth. Climate-driven depreciation or effective “stranding” of residential properties directly impairs retirement security.
- As banks and insurers withdraw from coastal and fire-prone markets, entire regions risk losing access to mortgage financing over time. Loss of financing access accelerates price declines and reduces the liquidity and value of RMBS held by institutional investors.
- U.S. insurers have substantial asset holdings in Residential Mortgage-Backed Securities (RMBS) which totalled $451 billion USD at the end of 2024. While the majority these RMBS holdings are agency-backed, a substantial and rising proportion, 32% in 2024, are in the form of private-label securities which bear the credit risk of the underlying loan[7].
- By the end of 2024, U.S. insurers had more than $1 trillion asset side exposure in commercial real estate (CRE) across three categories (1) direct property ownership (2) private loan portfolios and (3) securitised bonds (Commercial Mortgaged Backed Securities). Extreme climate events impair the value and income-generating capacity of these assets through physical damage, rising operating costs, and demand slide as tenants and buyers move from exposed locations. Concentrated exposure to climate-stressed geographies introduces a credit risk that may not be fully reflected in current risk assessments.[8]
As insurers withdraw from stressed markets, the pressure from greater annual insurance loss costs has driven rising premiums and coverage gaps constrain household affordability, accelerate mortgage delinquency and suppress demand which all drive property value declines and stress real estate buying and selling patterns. For many households, particularly retirees and near-retirees for whom home equity represents a substantial financial asset, these declines translate directly into impaired retirement security.
There are other consequences for communities also. Climate-driven impairment of commercial real estate assets, combined with the withdrawal of insurance and mortgage capital to support new development, erodes local tax bases and threatens the quality of public services. As employers relocate away from climate-stressed geographies, local employment and income decline, exacerbating the pressure on residential values and accelerating population outflow. This risks hollowing out communities that may lack the fiscal capacity to recover.
Retirement funds often carry significant CRE exposure and therefore can face funding ratio deterioration that puts the retirement income of public employees at risk. Regional financial institutions with concentrated exposure to climate-stressed real estate face their own solvency pressures, threatening to restrict credit availability across entire local economies.
There is a strong connection between physical hazards, insurance markets, property values, household wealth and community fiscal health, that makes the impact of climate catastrophes on real estate a matter of public financial security and therefore a core concern for the actuarial profession.
Research Objective
The study of climate-driven catastrophes and the effect on real estate crosses two of the actuarial profession's core obligations (1) managing the long-term financial exposures of life insurers and pension funds and (2) serving the public interest by identifying and describing risks to community financial security. The SOA Research Institute is seeking proposals for empirical, data-driven research that addresses both.
The research should quantify the scale and distribution of climate-driven real estate risk, trace its consequences for household wealth, retirement security and community financial stability, and assess current frameworks for measuring and managing that risk. Proposals should be grounded in real-world data rather than literature-based or theoretical work.
Proposals must demonstrate access to relevant datasets or present a credible and specific plan to acquire them. Whilst data availability and other considerations may make U.S. based research the most practical this is not a restriction and research concepts that are applicable globally are of interest.
The following six areas reflect the SOA’s research interests. Researchers are invited to address those areas most relevant to their proposed approach. Focused proposals concentrating on one or more of these topics are within scope.
1. Scale and Distribution of Climate-Driven Real Estate Risk
Using property-level and geospatial data, the research should quantify the current and projected scale of climate-driven real estate value impairment across the primary perils: wildfire, inland and coastal flooding, tropical cyclones and severe convective storms. This should include the geographic distribution of exposed residential and commercial real estate, the pace and pattern of price discounting in climate-stressed markets, and the populations most exposed to housing wealth loss, with particular attention to retirees, near-retirees and lower-income households for whom real estate represents a primary financial asset.
2. Transmission to Household and Community Financial Security
The research should explore and quantify the ways through which physical real estate losses spread into broader financial insecurity. This includes the effect of insurance market withdrawal on mortgage availability and affordability, the relationship between property value decline and retirement wealth impairment, the fiscal consequences for municipalities dependent on property tax revenues, and the employment and income effects of commercial real estate stress in climate-affected geographies. The research should distinguish between the immediate effects of acute climate events and the slower-moving chronic effects of demand changes, market repricing and insurer withdrawal.
3. Hazard Information
The research should examine the role of publicly available and proprietary hazard data in shaping market outcomes. In particular, whether these datasets have the potential to support orderly adjustment by driving community awareness to pursue early adaptation programs or whether increased availability of data accelerates capital withdrawal and valuation decline in exposed areas. The research should also assess whether the current level of hazard data and access to it is adequate or whether expanded data collection and sharing say by insurers, lenders or government agencies, would improve household and community outcomes.
4. Implications for Institutional Asset Portfolios
The research should assess exposures of life insurer and pension fund real estate asset portfolios to climate catastrophe risk including directly owned commercial real estate, commercial mortgage loan portfolios, CMBS holdings, and RMBS and agency MBS holdings. It should include an assessment of whether current risk management tools (e.g. credit ratings, loan covenants and internal risk models) adequately capture physical climate risk and explain the asset-side implications for long-term liability matching. The research should suggest practical frameworks that actuaries can apply when assessing the climate risk profile of real estate portfolios and securities.
5. Systemic Risk and Public Financial Security
The research should assess whether there is any systemic dimension to climate-driven real estate risk. This might examine the degree to which simultaneous stress across multiple institutions with geographically concentrated exposures could amplify financial instability at a regional or national level. This should include an assessment of the risk to public sector pension funds and the retirement income of their beneficiaries, the potential for regional mortgage market failure in the most exposed geographies. In assessing public financial security, the research should examine who bears the losses and whether there are equity issues including its disproportionate impact on elderly, lower-income and minority households. The research should produce findings accessible and useful to a broad audience as well as to the actuarial profession.
6. The Role of Artificial Intelligence and Advanced Analytics
The researchers should examine what artificial intelligence and advanced analytical methods can realistically contribute to improving financial security outcomes in the context of climate-driven real estate risk. This might include an assessment of current and emerging AI applications in risk identification, portfolio screening, early warning systems and hazard modelling. The research should distinguish between what is currently viable and what remains aspirational.
Proposal Requirements
To facilitate the evaluation of proposals, the following information should be submitted:
- Resumes of the researcher(s), including any graduate student(s) expected to participate, indicating how their background, education and experience bear on their qualifications to undertake the research. If more than one researcher is involved, a single individual should be designated as the lead researcher and primary contact. The person submitting the proposal must be authorized to speak on behalf of all the researchers as well as for the firm or institution on whose behalf the proposal is submitted.
- An outline of the approach to be used (e.g. literature search, model, etc.), emphasizing issues that require special consideration. Details should be given regarding the techniques to be used, collateral material to be consulted, and possible limitations of the analysis.
- A description of the expected deliverables and any supporting data, tools or other resources.
- Cost estimates for the research, including computer time, salaries, report preparation, material costs, etc. Such estimates can be in the form of hourly rates, but in such cases, time estimates should also be included. Any guarantees as to total cost should be given and will be considered in the evaluation of the proposal. While cost will be a factor in the evaluation of the proposal, it will not necessarily be the decisive factor.
Please note that as a policy, the SOA Research Institute generally does not provide funding to cover academic institution overhead expenses.
As a guide for developing the project budget, please review the Historical Project Cost Guide (see Appendix)
- A schedule for completion of the research, identifying key dates or time frames for research completion and report submissions. The SOA Catastrophe and Climate Strategic Research Program is interested in completing this project in a timely manner. Suggestions in the proposal for ensuring timely delivery, such as fee adjustments, are encouraged.
- Other related factors that give evidence of a proposer's capabilities to perform in a superior fashion should be detailed.
- Proposals must be no more than five pages in length exclusive of references and researcher bios.
Selection Process
The SOA Catastrophe and Climate Strategic Research Program will appoint a Project Oversight Group (POG) to oversee the project. The SOA Catastrophe and Climate Strategic Research Program is responsible for recommending the proposal to be funded. Input from other knowledgeable individuals also may be sought, but the SOA Catastrophe and Climate Strategic Research Program will make the final recommendation, subject to Society of Actuaries Research Institute (SOA) leadership approval. An SOA staff research actuary will provide staff actuarial support.
Questions
Any questions regarding this RFP should be directed to Research-CC@soa.org.
Notification of Intent to Submit Proposal
If you intend to submit a proposal, please email written notification by July 15, 2026 to Research-CC@soa.org.
Submission of Proposal
Please email your proposal to Research-CC@soa.org ; proposals must be received no later than July 29, 2026. It is anticipated that all proposers will be informed of the status of their proposal by the end August 2026.
Conditions
The selection of a proposal is conditioned upon and not considered final until a Letter of Agreement is executed by both the Society of Actuaries Research Institute and the researcher.
The Society of Actuaries Research Institute reserves the right to not award a contract for this research. Reasons for not awarding a contract could include, but are not limited to, a lack of acceptable proposals or a finding that insufficient funds are available. The Society of Actuaries Research Institute also reserves the right to redirect the project as is deemed advisable.
The Society of Actuaries Research Institute plans to hold the copyright to the research and to publish the results with appropriate credit given to the researcher(s).
The Society of Actuaries Research Institute may choose to seek public exposure or media attention for the research. By submitting a proposal, you agree to cooperate with the [Society of Actuaries/sponsoring entity] in publicizing or promoting the research and responding to media requests.
The Society of Actuaries may also choose to market and promote the research to members, candidates and other interested parties. You agree to perform promotional communication requested by the Society of Actuaries Research Institute, which may include, but is not limited to, leading a webcast on the research, presenting the research at an SOA meeting, and/or writing an article on the research for an SOA newsletter.
Conflict of Interest
You agree to disclose any of your material business, financial and organizational interests and affiliations which are or may be construed to be reasonably related to the interest, activities and programs of the Society of Actuaries Research Institute.
Appendix
The cost ranges below are intended as a guide for budgeting project costs for proposals in response to SOA Research Institute Request for Proposals (RFP). Please note these figures span the 33rd to 66th percentiles for all projects as well as projects that involve a specific approach (lit review, survey, etc.). They are based on historical costs over several recent years. Expected costs for some RFPs may fall outside these ranges depending on the nature of the work and resources required for completion.
All Contracted Projects
This category includes all contracted projects that the Institute has undertaken within the last several years.
The 33rd-66th percentile project costs range is $25,000 - $50,000.
Literature Reviews
This category includes projects that involved only a literature review or the cost for the portion of a larger project that included a literature review.
The 33rd-66th percentile project costs range is $15,000 - $20,000.
Surveys
This category includes all projects that had a survey as their primary component.
The 33rd-66th percentile project costs range is $28,000 - $55,000.
[1] (https://data.ca.gov/dataset/cal-fire-damage-inspection-dins-data
[2] https://www.ajg.com/gallagherre/news-and-insights/gallagherre-natural-catastrophe-and-climate-report-2025/
[3] https://www.cbsnews.com/news/fires-california-palisades-fire-homeowners-insurance-state-farm-fair-losses/
[4] https://www.cotality.com/hazard-hq/july-2025-central-texas-floods
[5] https://mstis.com/wp-content/uploads/2025/07/News-Brief-Billions-in-Economic-Losses-Expected-From-Devastating-Texas-Floods.pdf
[6] https://www.cotality.com/press-releases/corelogic-final-estimated-damages-for-hurricane-helene-to-be-between-30-5-billion-and-47-5-billion
[7] https://content.naic.org/sites/default/files/capital-markets-special-reports-rmbs-ye2024.pdf
[8] https://content.naic.org/sites/default/files/capital-markets-special-reports-cml-cre-ye2024.pdf