Sharing the Risk of Climate Impacts: insurance for infrastructure in the state of Maine

Over a four week period in late 2023 and early 2024 three major precipitation events hit Maine creating damages consistent with two major hurricanes in less than a month.  Flooding occurred in river towns and major damage was done to coastal communities.  Over a dozen piers used by the fishing industry were damaged or destroyed.  

Governor Janet Mills responded by establishing an Infrastructure Resilience and Rebuilding Commission, and CBE Director of Research Charlie Colgan was appointed as the “Representative with expertise in infrastructure finance and planning”.  The Commission issued its final report in May 2025, (A Plan for Infrastructure Resilience, Maine Infrastructure Rebuilding and Resilience Commission) for a variety of actions to improve Maine’ capacity to plan for and respond to natural disasters, with a particular emphasis on coastal communities.

The Commission also identified a number of questions to be addressed in the future.  One of these is whether it is possible to establish an entity that would issue insurance for public facilities such as roads, sewer and water systems, and piers and wharves.  Right now, the insurance for these facilities is the taxpayer who must come up with funds to repair and replace structures after storms.  Most of these funds have come from the federal government with matching funds from state and local governments.  

But with climate change the frequency and severity of storms increasing, evidence of which was amply provided by the storms that spawned the Commission, the demands on the taxpayer would become a massive strain.  The question was whether it was possible to save for the response to future disasters.  This is the purpose of insurance which allows saving but also for sharing the risk.

Investigating the feasibility of a public infrastructure insurance facility is now being undertaken by Dr. Colgan, following up on the climate vulnerability and infrastructure adaptation studies undertaken by the Center around the U.S. over the past decade.  There are currently no insurance policies that cover infrastructure so the project starts with a blank slate.  It will investigate recent developments in the theory of insurance as well as develop a risk model that can be used to test various assumptions of both possible damages and the fiscal requirements of managing different levels of risk.

The objective of the project is to test the hypothesis that a public infrastructure insurance program is possibly economically and political viable.  If the research shows that the idea is viable, the State will have the option of sponsoring more detailed planning to actually create the insurance facility.