The effects of climate change are altering the human condition—taking lives, property, treasured personal possessions and even livelihoods. According to Swiss Re, the effects of climate change threaten to  cut the world’s economy by $23 trillion by 2050 . In 2021,  there were over 20 named storms  resulting in  over $145 billion in weather-related damages , highlighting the need for businesses and communities to proactively prepare and evolve. In addition to the frequency and severity of weather events, there is also an increase in secondary perils, including wildfires, flooding, wind and hail. 

Insurers are among the most at risk from an industry perspective. At the same time, they are also well positioned to help offer protection. 

Insurance at its core is focused on people and trust. Behind the losses are millions of individuals whose lives are upended. Weather-related catastrophes are a critical moment of truth in the insurer-policyholder relationship. How insurers respond to their customers’ needs determines their journey toward resolution and future loyalty. 

P&C insurers are on the front lines of protecting people. For auto insurers, more expensive technologies are becoming standard on new model year vehicles, increasing the cost of repairing or replacing them when damaged. Property carriers are insuring a population where  4 in 10 Americans live in a county that has been hit by extreme weather.  

The insurance industry is working to understand and provide greater climate protection to policyholders while maintaining sustainable business models. The application of technology holds promise in providing relief, enabling catastrophe response, risk mitigation and perhaps even complete avoidance. 

Catastrophe Losses In Property And Auto 

The recent observance of Earth Day around the globe reminds us to always consider the implications of climate events. A simple example to illustrate this point is what happens during a hail event. According to  a report  from the Insurance Information Institute, “over the past decade, hail damage to vehicles, buildings and crops has averaged $8 billion to $14 billion annually.” Additionally,  hail losses primarily occur in quarters two and three each year , with states like South Dakota, Colorado and Wyoming seeing in some years as much as a third of all vehicle claims filed as a result of hail. We expect these costs will grow significantly as the percentage of tech-enabled cars with advanced driving assistance systems and autonomous vehicle features on the road increases.