How insurance companies are battered by hurricane season and climate change

Insurance companies are in a tough spot with this year's stronger-than-average hurricane season, while climate-related perils continue to push catastrophe losses higher. Here's how to invest around it. The insurance industry typically responds to large losses by reducing the availability of insurance and raising prices to offset the claims they expect to pay policyholders.

Even in the face of major hurricanes, investors can take advantage of dislocations in major insurance stocks because of the short-term uncertainty, according to Newsome. The Wall Street firm believes that companies with market share in catastrophe-prone insurance lines such as home insurance and commercial policies in Florida face the greatest peril and are the most vulnerable to sell offs.

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