New ratings services focus on climate risk for homeowners

A new industry that aims to rate the risk of climate change for individual properties is emerging.

Similar to how Moody’s and Standard & Poor’s rate private companies’ creditworthiness, firms such as Climate Check, First Street Foundation, Jupiter Intelligence, Moody’s ESG Solutions Group, and RMS are assessing climate risks including flooding, extreme heat, and wildfires based on the attributes of their locations.

Risk raters use recent natural disasters to gauge how effectively their models are at predicting risk. They combine peer-reviewed research in climatology and hydrology with a climate change model to produce risk maps.

“Some models are scientifically sound and highly precise, while others are lower quality,” writes Matthew E. Kahn Provost Professor of Economics and Spatial Sciences at USC. Kahn favors having the federal government set standards for this new ratings realm “to ensure that it provides reliable, accurate information.”