FinTech for Climate Resilience: Measuring Insurance Gaps, Mortgage Stress, and Household Credit Risk in the United States

Abstract

Climate-related hazards are increasingly transmitted into household balance sheets through the availability, affordability, and design of homeowners insurance. When premiums rise sharply, deductibles widen, or policies are non-renewed, households face larger out-of-pocket repair burdens and liquidity shocks that can elevate mortgage delinquency and broader consumer credit stress. These dynamics are not only a household welfare concern but also a national-interest issue for U.S. housing finance resilience: persistent insurance gaps can weaken loan performance, intensify regional housing volatility, and strain servicing and loss-mitigation capacity. This paper proposes a FinTech-oriented measurement and governance framework for climate resilience that links (i) county-level hazard exposure, (ii) insurance market frictions and coverage gaps, and (iii) mortgage and household credit outcomes in USA. Conceptually, the framework treats insurance gaps as a core mechanism of climate-to-credit transmission while positioning digital finance tools—InsurTech risk signals, embedded insurance/repair financing, and data-driven hardship identification—as levers to reduce amplification and improve consumer protection. Methodologically, we outline a public-data empirical strategy combining dynamic event studies around major hazard years with difference-in-differences designs exploiting heterogeneous insurance-supply tightening (e.g., non-renewal intensity and premium acceleration). We specify a replicable construct set and proxy map based on U.S. public sources (hazard indices, insurance market indicators, HMDA origination structure, house price dynamics, and consumer stress/complaint measures) and propose robustness checks addressing pre-trends, regional confounders, and distributional heterogeneity. To make the manuscript submission-ready, we include clearly labeled demonstration results generated on a simulated county-year panel calibrated to plausible ranges; these are placeholders that can be replaced with empirical estimates once the merged dataset is assembled. Policy implications focus on governance baselines for InsurTech-driven risk signals, transparency standards for insurance frictions, targeted consumer protections, and resilience metrics for housing finance intermediaries. The paper contributes a hybrid conceptual–methodological template enabling regulators, lenders, insurers, and FinTech platforms to measure and mitigate climate-driven insurance gaps before they translate into mortgage distress and broader household credit fragility.