Hedge funds eye deals too costly for insurers

Soaring costs: A file picture showing a burning house during the Eaton Fire tragedy on Jan 8 in Altadena, California. Regulators say the widening gap in natural-catastrophe insurance protection requires a whole array of new policy responses. — AFP

NEW YORK: As Los Angeles residents digested the apocalyptic scene left by wildfires earlier this year, the stage was simultaneously being set for hedge funds to pursue market-beating returns fanned by climate change.

The investment model in question is built around so-called subrogation claims, which are used by insurers to try to recoup some of the money they have paid out to policyholders.