Editor’s note: This article is the third installment in our Future of Risk series, which explores the rise of systemic risks — threats that are difficult to predict, span industries, and carry the potential for widespread disruption. This piece looks at climate volatility and property exposure, highlighting how land — once seen as a straightforward, stable asset — has become a complex investment requiring careful consideration in today’s evolving risk landscape.
Climate-driven property losses are no longer a surprise, but a more complex shift is underway. Extreme weather is turning once-prized land into stranded assets, leaving homeowners, developers, and communities with difficult decisions.
According to the National Oceanic and Atmospheric Administration (NOAA), the U.S. experienced 28 separate billion-dollar weather and climate disasters in 2024 — the most ever recorded in a single year. These events didn’t just impact structures. They reshaped the insurability, usability, and long-term value of entire properties, sometimes rendering the land unmarketable.
While rebuilding structures after extreme weather is still possible, what happens when the land itself becomes unbuildable or uninsurable? It’s no longer just about damage and claims. It’s about whether rebuilding makes sense at all.
Historically, risk models have focused on replacing buildings. But now, the land they reside on is becoming a greater concern.
Even when land is technically buildable, construction that meets modern resilience standards can cost two to four times more than traditional methods, putting serious financial pressure on property owners.
These changes challenge the traditional belief that land is a stable, long-term asset. As insurers reassess geographic exposure, brokers and property owners are being pushed to reevaluate how location affects value.
This evolution in thinking doesn’t just affect individual parcels — it’s triggering ripple effects across infrastructure, economics, and entire communities.
Climate events don’t happen in a vacuum. When disaster strikes, the impact extends well beyond the property line, and often far beyond the immediate event.
Roads, power grids, and clean water access may take weeks or months to restore. In some regions, like those affected by Vermont’s recent flooding, recovery has been slow or stalled due to displaced populations, material shortages, and underfunded infrastructure.
These challenges aren’t just about inconvenience. They undermine local economies by:
Businesses outside of disaster zones also feel pressure when disruptions hit suppliers, transportation networks, or labor pools. Damage to these foundational systems triggers a cascading effect across industries and geographies.
While commercial portfolios may have more tools to absorb these risks, through geographic diversification or retained risk strategies, individual property owners often face limited, costlier options. That reality is shifting how markets evaluate risk and make development decisions.
As traditional carriers pull back from high-risk areas, new approaches are stepping in to address gaps in coverage, especially for complex or exposed properties. Parametric insurance is one option gaining traction.
Parametric insurance policies pay out when a specific trigger, like wind speed, wildfire proximity, or rainfall thresholds, is met, regardless of the actual loss incurred. This model offers:
Clear communication helps set expectations, since payouts hinge on trigger thresholds rather than damage assessments. If the event doesn’t meet the agreed threshold, the insurer doesn’t issue a payout.
Insurers are using AI-powered micro-modeling to underwrite risks at a more granular level. Instead of assessing broad geographic zones, they can now evaluate exposure down to the parcel. This approach enables:
Many traditional coverage options are shrinking, and carriers are becoming increasingly unwilling to insure specific risks. Just one major disaster could lead to further market retreat, limiting available options even more. In this tightening environment, anticipating exposure with data-backed insights can offer a strategic edge.
Together, these tools are reshaping the conversation around insurability. But they also signal a more rigid, data-driven marketplace that rewards preparation and penalizes assumptions.
Property owners and brokers alike are facing new expectations — and new opportunities to act before risk becomes reality.
Many clients don’t realize what their policies exclude, or whether their coverage will still be available next year. Proactive conversations can uncover these risks before they become costly surprises.
Increasingly, clients aren’t just asking whether a property is covered; they’re questioning whether it still makes sense to hold onto it at all. That shift in mindset underscores the need to view risk not as a policy detail but as a strategic decision point.
Jeff Clinkscales, an insurance professional with more than 25 years in the industry, specializes in private client services, risk analysis, and high-value property protection. As a trusted advisor at Risk Strategies, he provides expert solutions for managing climate volatility and property exposure.