Skip Navigation
  • Careers
  • Report a Claim
  • Contact Us
Risk Strategies Logo
  • Industries

    • Agriculture
    • Architects & Engineers
    • Aviation
    • Cannabis
    • Construction
    • Dental
    • Education
    • Entertainment
    • Financial Services
    • Fine Art
    • Healthcare
    • Law Firms
    • Marine & Yacht
    • Nonprofit & Human Services
    • Private Equity
    • Public Sector
    • Real Estate
    • Relocation
    • Transportation
    • Waste & Recycling
    • Wineries
  • Solutions

      • Captives
      • Casualty
      • Cyber
      • Environmental
      • International
      • Management Liability
      • Property
      • Surety
      • Employee Benefits Overview
      • Benefit Administration and Technology
      • Benefits Compliance Support
      • Data & Analytics
      • Human Capital Advisory Services
      • International Benefits
      • Absence Management & Ancillary Programs
      • Voluntary & Lifestyle Benefits
      • Medicare
      • Financial & Wealth Overview
      • Life Insurance
      • Private Client Services Overview
      • Homeowners
      • Flood
      • Collections
      • Umbrella & Excess Liability
      • Auto
      • Collector & Exotic Car
      • Boat & Yacht
      • Travel Medical & Trip Insurance
      • Family Office
      • Cyber Insurance - Family Office
      • Cyber Insurance - Individuals
      • Specialty Coverages
      • Private Client Risk Resource Center
    • Reinsurance
      • Risk Management Services Overview
      • Analytics
      • Claims Management & Advocacy
      • Loss Control
      • Safety Consulting Services
      • Pro Safety Training Courses
      • Workers’ Comp: Premium Review & Recovery
  • Consulting

    • Consulting Overview
    • Actuarial Services
    • Healthcare Claim Audit Services
    • Health and Welfare
    • Mergers and Acquisitions
    • Pharmacy Consulting
    • Retirement Benefits
  • News and Insights

    • All Insights
    • Blog
    • Emergency Resource Centers
    • Employee Benefits Compliance Center
    • Events
    • Media Coverage
    • State of the Market Reports
    • Press Releases
    • Private Client Resources
    • Webinars
  • Company

    • About Us
    • Annual Report
    • Careers
    • Culture and Values
    • Diversity, Equity & Inclusion
    • Environmental, Social, & Governance
    • General Terms of Business
    • Leaders
    • Local Expertise
    • Mergers & Acquisitions
    • Recognition & Awards
    • Risk Strategies Foundation
    • Transparency and Disclosures
  • Join Us
    • Careers
    • Mergers & Acquisitions
  • Industries
    • Agriculture
    • Architects & Engineers
    • Aviation
      • Aviation Business Insurance - Manned Risk
      • Non-Owned Aviation
      • Unmanned Aerial System and Drones
    • Cannabis
    • Construction
      • Alternative Solutions
      • Financing & Pre-Construction
      • Insurance Solutions
      • Risk Management
      • Surety
    • Dental
      • Insurance for Dental Professionals
      • Dental Malpractice Insurance
      • BOP Insurance - Dental Practices & DSOs
      • Dental School Graduates
      • Dental Associates & Hygienists
      • Dental Practice Owners
      • Dental Service Organizations (DSOs)
    • Education
      • Employee Benefits for Education
      • Property, Casualty & Liability for Education
      • Student Health & Wellness
        • Student Health Brokerage and Consulting
        • Student Health Plan Administration
        • Student Health Insurance Plans
        • Solutions for Student Athletes
        • Student Health & Wellness Tools
        • Special Risk Insurance
    • Entertainment
      • Film & Television
      • Advertising Production Wrap Ups
      • Advertising/PR
      • Event Cancellation & Non-Appearance
      • Music & Touring
      • Theatrical Production & Live Performance 
      • Venue Insurance
    • Financial Services
      • Asset Managers
      • Banks & Non-Bank Lending
      • Collections
      • Consumer Financial Services
      • Financial Tech
      • Insurance Companies
    • Fine Art
      • Artists
      • Artist Endowed Foundations
      • Auction Houses
      • Fine Art Packers / Shippers / Warehouses
      • Galleries
      • Museums
      • Private Art Dealers / Advisors
      • Private Collectors
    • Healthcare
      • Employee Benefits - Healthcare
      • Managed Care / Stop Loss
      • Medical Malpractice
      • Property & Casualty - Healthcare
      • Reinsurance
    • Law Firms
    • Marine & Yacht
      • Boat & Yacht For Individuals
      • Commercial & Recreational Marine Businesses
        • Marine Businesses
        • Sailing Organizations - Burgee Program
      • Jackline Insurance Solutions for Cruisers
      • Mega Yachts
      • One-Design Insurance Program
      • Crew Medical Insurance
      • Sailors Health Insurance Program
      • US Sailing Insurance Solutions
    • Nonprofit & Human Services
    • Private Equity
      • Crypto Companies
    • Public Sector
      • Public Safety Organizations & Municipalities
    • Real Estate
      • Commercial
      • Community Associations
      • Hospitality
      • Residential / Habitational
      • REITs
      • Retail
      • Specialty Programs
    • Relocation
      • Domestic Household Goods
      • Expat Renters & Living Insurance
      • Relocation Claims Service
      • International Household Goods
      • Supplemental Movers Coverage
      • Temporary Living Insurance
      • Vacant Home
    • Transportation
      • Business Auto Insurance
      • Last Mile Delivery
      • While Under Dispatch Insurance
      • Forwarding & Brokering
      • Workers' Compensation
    • Waste & Recycling
    • Wineries
  • Solutions
    • Commercial Insurance
      • Captives
      • Casualty
        • Analytics
        • Auto Liability & Physical Damage
        • Captives & Alternative Risk Financing
        • Claims Advocacy & Loss Control
        • Excess Liability
        • General Liability
        • Product Recall
        • Workers' Compensation
      • Cyber
        • Cyber Resolute
        • Cyber Risk Assessment and Analytics
        • Cyber Risk Response & Claims Advocacy
        • Cyber Insurance - Family Office
        • Cyber Insurance - Individuals
      • Environmental
        • Contractors Pollution Liability
        • Environmental Excess
        • Environmental Liability Transfer
        • Environmental Liability - Healthcare
        • Environmental Liability - Higher Education
        • Pollution Legal Liability
        • Environmental Liability - Private Equity
        • Professional Environmental Liability Insurance
        • Real Estate Development
        • Remediation Cost Cap
        • Secured Creditor Protection for Lenders
        • Underground Storage Tanks
      • International
      • Management Liability
        • Management Liability - Entertainment
        • Management Liability - Financial Institutions
        • Management Liability - Healthcare
        • Management Liability - Real Estate
      • Property
        • Builder's Risk
        • Property Claims Services
        • Inland Transit and Ocean Cargo
        • Natural Hazard Catastrophe Modeling
        • Political Violence and Terrorism
        • Property Damage & Business Interruptions Valuations
        • Property Loss Prevention and Control
      • Surety
    • Employee Benefits
      • Employee Benefits Overview
      • Benefit Administration and Technology
      • Benefits Compliance Support
      • Data & Analytics
      • Human Capital Advisory Services
      • International Benefits
      • Absence Management & Ancillary Programs
      • Voluntary & Lifestyle Benefits
      • Medicare
    • Financial & Wealth
      • Financial & Wealth Overview
      • Life Insurance
    • Private Client Services
      • Private Client Services Overview
      • Homeowners
      • Flood
      • Collections
      • Umbrella & Excess Liability
      • Auto
      • Collector & Exotic Car
      • Boat & Yacht
      • Travel Medical & Trip Insurance
      • Family Office
      • Cyber Insurance - Family Office
      • Cyber Insurance - Individuals
      • Specialty Coverages
      • Private Client Risk Resource Center
    • Reinsurance
    • Risk Management Services
      • Risk Management Services Overview
      • Analytics
      • Claims Management & Advocacy
      • Loss Control
      • Safety Consulting Services
      • Pro Safety Training Courses
      • Workers’ Comp: Premium Review & Recovery
  • Consulting
    • Consulting Overview
    • Actuarial Services
    • Healthcare Claim Audit Services
    • Health and Welfare
    • Mergers and Acquisitions
    • Pharmacy Consulting
    • Retirement Benefits
  • News and Insights
    • All Insights
    • Blog
    • Emergency Resource Centers
      • Cybersecurity
      • Earthquake
      • Hurricane
      • Pandemic
      • Riot & Civil Unrest
      • Severe Storms
      • Violence & Active Shooter
      • Wildfire
      • Winter Weather
    • Employee Benefits Compliance Center
    • Events
    • Media Coverage
    • State of the Market Reports
    • Press Releases
    • Private Client Resources
    • Webinars
  • Company
    • About Us
    • Annual Report
    • Careers
    • Culture and Values
    • Diversity, Equity & Inclusion
      • BeHEARD Series
      • DE&I Structure
      • Employee Resource Groups
    • Environmental, Social, & Governance
    • General Terms of Business
    • Leaders
    • Local Expertise
    • Mergers & Acquisitions
    • Recognition & Awards
    • Risk Strategies Foundation
    • Transparency and Disclosures
      • General Terms of Business
      • Conflict of Interest Policy
      • Compensation Disclosure
      • Enterprise Risk Management
  • Join Us
    • Careers
      • Benefits & Wellness
      • Investing in Growth & Leadership
      • Life at Risk Strategies
      • Next Steps
    • Mergers & Acquisitions
      • Partnership Benefits
      • Why Join Us?
      • Onboarding & Integration
  • Careers
  • Report a Claim
  • Contact Us

You are about to leave Risk Strategies website and view the content of an external website.

You are leaving risk-strategies.com

By accessing this link, you will be leaving Risk Strategies website and entering a website hosted by another party. Please be advised that you will no longer be subject to, or under the protection of, the privacy and security policies of Risk Strategies website. We encourage you to read and evaluate the privacy and security policies of the site you are entering, which may be different than those of Risk Strategies.

OK
  • News and Insights
  • Blog
Subscribe

Subscribe via Email

  • News and Insights
  • Blog
July 29, 2022

The Future of Risk: Climate Change Prompts Shift in P&C Market

Risk Future of Risk
4 min read
John Meder, Head of Risk Consulting and Claims Advocacy
  • Facebook
  • X (Twitter)
  • LinkedIn
  • Email
The Future of Risk: Climate Change Prompts Shift in P&C Market | Risk Strategies
  • Facebook
  • X (Twitter)
  • LinkedIn
  • Email

Climate change and more frequent natural disasters have been wreaking havoc on communities worldwide and the insurance industry as a whole. As the frequency and severity of natural disasters and other severe weather risks increases, the CAT models insurance carriers have long used to determine pricing and their risk appetite are proving less effective and predictive than they used to be.

Certain regions are also consistently being hit more frequently by severe natural disasters- most notably wildfires across California and the Pacific Northwest and hurricanes throughout Florida and the Southeast. Underwriters are also now confronted by climate linked issues and natural disasters in geographic areas never anticipated such as the Northeast and Midwest. After delivering sizable payouts in CAT zones and other “lower-risk” areas, insurers are taking necessary corrective action by increasing rates and tightening underwriting requirements, especially in higher-risk areas.

Driven by climate change, the property insurance market remains tight as property underwriters race to transform underwriting property risks to newer, still unproven, CAT models. In preparation for this new normal, brokers, and property owners must pay closer attention to the changing landscape and do everything in their control to manage risks, mitigate losses and prepare for the worst.

Shifting Capacity, Expanding At-Risk Zones

Carrier capacity is rapidly running out in wildfire-prone areas as many insurers have exited these areas entirely, viewing the risk as too high and too unpredictable. In contrast, there is not yet a capacity issue in hurricane-prone zones as carriers are able to use the annual renewal cycle to shift their exposure and rearrange portfolios allowing them to more easily adapt to some of the annual climate events.

Premiums and rates in these areas remain high, but coverage is available. In fact, the higher pricing has started to attract new carrier entries to the space, further increasing capacity in select territories. Increased competition has not yet suppressed pricing, however. Time will tell whether climate-linked events will lead to consistently large payouts that prompt insurers to restrict property insurance in hurricane-prone regions.

Inflation Worsens Conditions

In an already challenging environment, inflation is exacerbating climate change’s effects on the insurance industry leading to increased construction costs for goods and labor expenses making it more expensive to rebuild after a disaster. Additionally, insuring properties to value with rising inflation is leading many homes and businesses to not be properly insured for their true replacement cost values. In some cases, this has led to many property owners to be significantly underinsured. Some industry experts are actually calling for property owners to increase the insured property value by 18-22% year-over-year to keep pace with inflation and the increased costs.

Also, to protect themselves from having to pay far over the insured value of a property when loss estimates are based on inflation-influenced costs, many insurers in the commercial insurance space are starting to limit when they will offer “blanket limits” and beginning to use a property insurance margin clause or, in other instances, capping losses at 110% of a reported value.

Knowing this, it is important that property owners work with their brokers, appraisal firms and underwriters to determine accurate replacement cost values of their property and secure insurance coverage at full valuation.

Greater Loss Control is Essential to Offset Climate Linked Events

Escalating climate change has made risk management and loss control more important than ever. Property owners must work to make themselves a better risk. Steps include:

  • Properly insuring your property to value
  • Engage a property loss control engineer to assess property for exposures and vulnerabilities
  • Use of CAT resilient construction materials
  • Pretreating homes and clearing brush in wildfire-prone areas
  • Shuttering and leak-proofing homes in hurricane-prone areas
  • Ensuring roofs and homes are properly maintained
  • Create a plan to deploy experts to assist in relocating fine arts and other valuables

It is also important for property owners to prepare in advance for any type of a natural disaster. We are now working with many of our clients to connect them with disaster recovery firms and forensic accountants on the front end, before an incident occurs, to build relationships in advance and support necessary preparations. It is also critically important to assess your property insurance policy to make sure many of these costs are reimbursed by the insurance carrier post-loss as part of insurance policy.

Creating a Path Forward

Climate change has created unique challenges for the insurance industry. We also don’t know when the insurance market will settle or how or when or where CAT zones will grow. For now, the best path forward for property owners is to work closely with their insurance broker to understand the shifting landscape and the best techniques available, whether it is a diverse set of insurance coverages or risk mitigating strategies, for protecting their assets.

Want to learn more?

Find me on LinkedIn, here.

Connect with the Risk Strategies Risk Management Services team at safety@risk‐strategies.com.

Email me directly at jmeder@risk‐strategies.com.

The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client. 

Related Posts

See all posts

Cyber Risk
5 min read
April 02, 2025

The Future of Risk: Cyber Threats Affecting Businesses in 2025

Editor’s note: The way businesses approach risk is undergoing a fundamental shift. This article is …
Read article
Cyber Risk
7 min read
March 04, 2025

The Future of Risk: Systemic Risks to Watch in 2025

The days of treating risks as isolated incidents are over. As we move deeper into 2025, business …
Read article
Cyber Risk
8 min read
August 21, 2024

Cyber Resilience Lessons from the CrowdStrike Outage

Editor's Note: This article originally appeared in Carrier Management. Reprinted with permission, …
Read article
Risk Strategies Logo
  • Report a Claim
  • Contact
  • Terms of Use
  • Cookie Policy
  • Privacy Policy
  • Consumer Health Data Privacy Notice
  • Accessibility
  • Health Plan Transparency Compliance
  • Accessibility
  • Cookie Policy
  • Health Plan Transparency Disclosure
  • Privacy Policy
  • Terms of Use
©2025 Risk Strategies. All rights reserved.

Connect with Us

  • LinkedIn
  • X
  • Instagram
  • Facebook