Hedge funds and private equity firms are now buying the legal 'right to sue' from insurance companies after climate disasters.
March 31, 2026
Original Paper
Subrogation as Climate Governance
SSRN · 6468780
The Takeaway
A new secondary market allows insurers to sell their subrogation rights—the ability to sue negligent parties like utilities for causing wildfires—to investors for quick liquidity. This turns climate liability into a tradable financial asset, shifting the role of 'risk governor' from insurance companies to Wall Street speculators.
From the abstract
As climate change intensifies wildfires, floods, and other catastrophic events, homeowners insurance has become a critical site for allocating the resulting losses, owing to its economic significance for millions of Americans. Yet, debates over insurance reform have focused largely on pricing, availability, and public backstops, overlooking the governance role played by insurance doctrine itself. This Article identifies subrogation as an underappreciated but important feature of insurance law an