For insurers, “customer” is one word that encompasses individual policyholders, business owners, risk managers, agents and brokers, and others, all with different (often divergent) priorities. For reinsurers – whose primary customers are insurers themselves – “understanding the customer” is particularly challenging.
This was part of the motivation behind RiskScan 2024 – a collaborative survey carried out by Munich Re US and Triple-I. The survey provides a cross-market overview of top risk concerns among individuals across five key market segments: P&C insurance carriers, P&C agents and brokers, middle-market business decision makers, small business owners, and consumers. It explores not only P&C risks, but also how economic, political, and legal pressures shape risk perceptions.
“I get very excited when we have a chance to be in our customers’ shoes,” said Kerri Hamm, EVP and head of cyber underwriting, client solutions, and business development at Munich Re US, in a recent Executive Exhange interview with Triple-I CEO Sean Kevelighan. “To really understand how they feel about a broad range of issues from what are their most important risks to how they feel about the cost of insurance and the economic environment.”
Hamm discussed how more than one-third of respondents ranked economic inflation, cyber risk, and climate change as top concerns, identifying them as “increasing or resulting in rises of the cost of insurance.”
“When we really understand what our customers want, we can design a better product and think about whether the coverages we’re providing are meaningful to them,” Hamm said. “That can help us match pricing better to their expectations.”
One result that Hamm found “surprising” was that “legal system abuse” didn’t appear to be as widely accepted by respondents – apart from the insurance professionals – as driving up insurance costs. Kevelighan cited other research – including by Triple-I’s sister organization, the Insurance Research Council – that has found consumers to be aware of the growing influence of “billboard attorneys”.
Unfortunately, he said, “They don’t seem to be making the connection with how that’s affecting them. What we’re trying to do at Triple-I is to help them make that connection.”
Kevelighan talked about Triple-I’s education campaign around “the billboard effect” in Georgia. That campaign includes an actual billboard (“Trying to fight fire with fire,” he said), as well as a microsite called Stop Legal System Abuse. The campaign focuses on Georgia because the state tops the most recent list of places that the American Tort Reform Foundation calls“judicial hellholes”.
“We’re trying to help citizens in Georgia see that this is costing you,” Kevelighan said, adding that Triple-I has seen high engagement through the program with people in the state.
Identifying opportunities to mitigate climate risk was on the minds of “Risk Take” presenters at Triple-I’s 2024 Joint Industry Forum (JIF). Risk Takes – a new addition at JIF – are 10-minute problem/solution-oriented presentations by high-impact experts who are deeply engaged in addressing specific perils.
Inserted between panel discussions of broader issues and trends, these compact talks were tightly focused on how current challenges are being met.
Munich Re US, for example, is diving deep into understanding how consumers and insurers perceive climate-related risks. According to RiskScan 2024, a recently published survey by Munich Re US and Triple-I, more than one-third of respondents ranked climate change as a top concern, identifying it as “a key driver of insurance costs,” said Kerri Hamm, EVP and head of cyber underwriting, client solutions, and business development at Munich Re US.
However, when it comes to flood risk, the survey highlighted a substantial disconnect between concern about the peril and understanding of related insurance coverage. Despite understanding the rising severity of climate risks and their direct influence on insurance costs, many consumers erroneously believe their homeowners policy includes flood coverage or that they do not reside in an area at risk of flooding, contributing to a significant flood protection gap.
High-risk areas are only expanding, Hamm pointed out, as upsurges in flash flooding implicate more and more noncoastal properties. Increased private-sector interest in flood risk has led to new forms of flood coverage, such as a private Inland Flood Endorsement offered at Munich Re, to support these properties. Take-up rates for these insurance products remain low – underscoring the importance of consumer education and improved training for agents and brokers to encourage flood insurance sales.
“We can do better as an industry to make options available, attractive, and better known to vulnerable homeowners,” Hamm said. Education is vital, as is “developing innovative solutions that benefit our society by closing the insurance gap.”
Combining geoscience with data science is one solution, said Helge Jørgensen, CEO and co-founder of the Norway-based 7Analytics. Jørgensen discussed how, by leveraging geological and hydrological information with machine learning technology, his company develops granular data that can map out property flood risk “neighbor by neighbor,” enabling highly representative flood policies.
Beyond incentivizing private insurers to write flood coverage, this data is further “crucial for communities,” Jørgensen stressed, “because, if you have a lot of information on which areas and buildings are more exposed to flooding, then you can build resilience.”
Urban growth, particularly rising populations in higher-risk areas, render community-level resilience initiatives even more important, he noted.
Guidewire’s Christina Hupy reinforced Jørgensen’s emphasis on utilizing granular data while discussing HazardHub, a property risk data platform owned by Guidewire.
“Historically, risk data was provided only at the Census block or even ZIP code level,” Hupy said, whereas HazardHub provides comprehensive and updated geospatial data across various perils to pinpoint individual property risk levels.
In collaboration with Triple-I, HazardHub will release a report in early 2025 focusing on wildfire risk within three high-risk California counties, aiming to demonstrate how using detailed geographic data can help sustain or improve underwriting profitability within such areas.
“We’re going to need to look at mitigation in these high-risk areas as the next frontier,” Hupy said, “to spark that interest from California government and carriers” and enhance resilience “both from a customer and a business perspective” in the state.
California’s Department of Insurance helped launch this frontier last month by announcing new regulations allowing insurers to use catastrophe risk modeling to set rates, rather than limiting insurers to only historic risk data, as was the rule for decades. Insurers must also expand their coverage in riskier areas and account for resilience efforts when setting rates, which was also not previously possible.
Alongside emerging forms of insurance coverage and innovative granular data tools, such regulations empower the insurance industry to incentivize climate risk mitigation and achieve considerable progress towards eliminating the protection gap.
California’s Department of Insurance last week posted long-awaited rules that remove obstacles to profitably underwriting coverage in the wildfire-prone state. Among other things, the new rules eliminate outdated restrictions on use of catastrophe models in setting premium rates.
The measure also extends language related to catastrophe modeling to “nature-based flood risk reduction.” In the original text, “the only examples provided of the kinds of risk mitigation measures that would have to be considered in this context involved wildfire. However, because the proposed regulations also permit catastrophe modeling with respect to flood lines, it was appropriate to add language to this subdivision relating to flood mitigation.”
The relevant language applies “generally to catastrophe modeling used for purposes of projecting annual loss,” according to documents provided by the state Department of Insurance.
Benefits for policyholders
As a result, the department said in a press release, “Homeowners and businesses will see greater availability, market stability, and recognition for wildfire safety through use of catastrophe modeling.”
For the past 30 years, California regulations – specifically, Proposition 103 – have required insurance companies to apply a catastrophe factor to insurance rates based on historical wildfire losses. In a dynamically changing risk environment, historical data alone is not sufficient for determining fair, accurate insurance premiums. According to Cal Fire, five of the largest wildfires in the state’s history have occurred since 2017.
The state’s evolving risk profile, combined with the underwriting and pricing constraints imposed by Proposition 103, has led to rising premium rates and, in some cases, insurers deciding to limit or reduce their business in the state.
With fewer private insurance options available, more Californians have been resorting to the state’s FAIR Plan, which offers less coverage for a higher premium. This isn’t a tenable situation.
“Put simply, increasing the number of policyholders in the FAIR Plan threatens the solvency of insurance companies in the voluntary market,” California Insurance Commissioner Ricardo Lara explained to the State Assembly Committee on Insurance. “If the FAIR Plan experiences a massive loss and cannot pay its claims, by law, insurance companies are on the hook for the unpaid FAIR Plan losses…. This uncertainty is driving insurance companies to further limit coverage to at-risk Californians.”
“Including the use of catastrophe modeling in the rate making process will help stabilize the California insurance market,” said Janet Ruiz, Triple-I’s California-based director of strategic communication. “Homeowners in California will be able to better understand their individual risk and take steps to strengthen their homes.”
The new measure also requires major insurers to increase the writing of comprehensive policies in wildfire-distressed areas equivalent to no less than 85 percent of their statewide market share. Smaller and regional insurance companies must also increase their writing.
Requirements for insurers
It also requires catastrophe models used by insurers to account for mitigation efforts by homeowners, businesses, and communities – something not currently possible under existing outdated regulations today.
Moves like this by state governments – combined with increased availability of more comprehensive and granular data tools to inform underwriting and mitigation investment – will go a long way toward improving resilience and reducing losses.
The efficacy of collaboration and investment by “co-beneficiaries” in resilience initiatives was a dominant theme throughout Triple-I’s 2024 Joint Industry Forum – particularly in the final panel, which celebrated leaders behind recent real-world impacts of such investments.
Moderated by Dan Kaniewski, Marsh McLennan (MMC) managing director for public sector, the panelists discussed how their multi-industry backgrounds inform their innovative mindsets, as well as their knowledge on the profound ripple effects of targeted resilience planning.
The panel included:
Jonathan Gonzalez, co-founder and CEO of Raincoat;
Bob Marshall, co-founder and CEO of Whisker Labs;
Dawn Miller, chief commercial officer of Lloyd’s and CEO of Lloyd’s Americas; and
Lars Powell, director of the Alabama Center for Insurance Information and Research (ACIIR) at the University of Alabama and a Triple-I Non-Resident Scholar.
Productive partnership
Kaniewski – who spent most of his career in emergency management, previously serving as the second-ranking official at the Federal Emergency Management Agency (FEMA) and the agency’s first deputy administrator for resilience – kicked off the panel by raising the question “how do we define success?”
He characterized success as “putting theory into practice” and “having elected officials taking steps to reduce risk and transfer some of this risk from federal, state, or local taxpayers.”
But, as participants in earlier panels and this one made clear, government efforts can only go so far without private-sector collaboration.
“It doesn’t matter who makes that investment, whether it’s the homeowner, the business owner, or the government,” Kaniewski explained. “The reality is we all benefit from that one investment. If we can acknowledge that we benefit from those investments, we should do our best to incentivize them.”
Kaniewski and Raincoat’s Gonzalez were both integral in the development of community-based catastrophe insurance (CBCI), developed in the wake of Superstorm Sandy in 2012.
“A lot of the neighborhoods that experienced flooding due to Sandy didn’t have access to insurance prior to the flooding – and then, post flooding, the government really had to step up to figure out how to keep those families in those houses,” Gonzalez said.
In collaboration with the city, a nonprofit called the Center for NYC Neighborhoods developed the concept of buying parametric insurance on behalf of these communities, with any payouts going toward helping families stay in their homes after disasters. Unlike traditional indemnity insurance, a parametric policy pays out if certain agreed-upon conditions are met – for example, a specific wind speed or earthquake magnitude in a particular area – regardless of damage. Parametric insurance eliminates the need for time-consuming claim adjustment. Speed of payment and reduced administration costs can ease the burden on both insurers and policyholders.
In this case, Kaniewski said, success was reflected in the fact that the pilot program received sufficient funding not only for renewal but expansion, bringing needed protection to even more vulnerable communities.
Powell reinforced this sentiment in explaining ACIIR’s research on the FORTIFIED method, a set of voluntary construction standards created by the Insurance Institute for Business and Home Safety (IBHS) for durability against severe weather. The insurance industry-funded Strengthen Alabama Homes program issues grants and substantial insurance premium discounts to homeowners to retrofit their houses along these guidelines, prompting multiple states to replicate the program.
Such homes in Alabama sustained 54 to 76 percent reduced loss frequency from Hurricane Sally compared to standard homes, Powell reported, and an estimated 65 to 73 percent could have been saved in claims if standard homes were FORTIFIED.
Incentivizing contractors to learn FORTIFIED standards was especially critical, Powell explained, because they further advertised these skills and expanded the presence of FORTIFIED homes beyond the grant program.
“A lot of companies have said for several years, ‘we don’t know if we’re comfortable writing these…we haven’t seen it on the ground,’” Powell said. “Well, now we’ve seen it on the ground. We need to have houses that don’t burn down or blow over. We know how to do it, it’s not that expensive.”
Addressing concerns to drive adoption
Miller described how Lloyd’s Lab works to ease that discomfort by creating a space for businesses to nurture and integrate novel insights and products without fear. With mentor support, companies are encouraged to test new ideas while free from the usual degree of financial and/or intellectual property risks attached to innovation investments.
“It’s about having an avenue out to try,” Miller said. “Having that courage, as we continue to work together, to try to understand what’s working, what’s not, and being brave to say, ‘this isn’t working, but we can course correct.’”
Whisker Labs’ Marshall noted that numerous insurance carriers have taken a chance on his company’s front-line disaster mitigation devices, Ting, by paying for and distributing them to their customers.
Ting plug-in sensors detect conditions that could lead to electrical fires through continuous monitoring of a home’s electrical system. Statistically preventing more than 80 percent of electrical fires, communities benefit – not only by preventing individual home fires but also by providing data about the electrical grid and potentially heading off grid-initiated wildfires.
“There are so many applications for the data,” Marshall said, but “to have a true impact on society…we have to prove that we’re preventing more losses than the cost, and we have to do that in partnership with insurance carriers.”
Everyone wins if everyone plays
Cultivating innovative solutions is pivotal to enhancing resilience, the panelists agreed – but driving them forward requires more than just the insurance industry’s support.
He pointed to a project last year – funded by Fannie Mae and developed by the National Institute of Building Science (NIBS) – that culminated in a roadmap for resilience investment incentives, focusing on urban flooding.
The co-authors of the project, including Triple-I subject-matter experts, represented a cross-section of “co-beneficiary” groups, such as the insurance, finance, and real estate industries and all levels of government, Kaniewski said.
Implementation of the roadmap requires participation from communities and multiple co-beneficiaries. Triple-I and NIBS are exploring such collaborations with potential co-beneficiaries in several areas of the United States.
Triple-I recently kicked off a new webinar series featuring its Non-Resident Scholars. The first episode focused on the rising severity of natural catastrophes and innovative data initiatives these scholars are engaged in to help mitigate the impact of these perils.
Moderated by Triple-I’s Chief Economist and Data Scientist Michel Léonard, the panel included:
Phil Klotzbach, Senior Research Scientist in the Department of Atmospheric Science at Colorado State University;
Victor Gensini, meteorology professor at Northern Illinois University and leading expert in convective storm research;
Seth Rachlin, social scientist, business leader, and entrepreneur currently active as a researcher and teaching professor; and
Colby Fisher, Managing Partner and Director of Research and Development at Hydronos Labs.
“Wild and crazy”
Klotzbach discussed “the wild and crazy 2024 Atlantic hurricane season,” which he called “the strangest above-normal season on record.”
Abnormally fluctuating periods of activity this year created “a story of three hurricane seasons,” reflecting a broader trend of decreasing storm frequency and increasing storm severity, Klotzbach said.
While Klotzbach and his forecasting team’s “very aggressive prediction for a very busy season” was validated by Hurricane Beryl’s landfall as the earliest Category-5 hurricane on record — followed by Debbie and Ernesto — “we went through this period from August 20 to September 23 where we had almost nothing. It was extremely quiet.”
After extensive media coverage claiming the forecasts were a “massive bust,” along came Hurricane Helene, which developed into the “strongest hurricane to make landfall in the Big Bend of Florida since 1851.” Helene drove powerful, destructive flooding inland – most notably in Asheville, NC, and surrounding communities. Then came Hurricane Milton which was noteworthy for spawning numerous fatal tornadoes.
“Most tornadoes that happen with hurricanes are relatively weak – EF0, EF1, perhaps EF2,” Gensini – the panel’s expert on severe convective storms (SCS) – added. “Milton had perhaps a dozen EF3 tornadoes.”
Costly and underpublicized
Severe convective storms – which include tornadoes, hail, thunderstorms with lightning, and straight-line winds – accounted for 70 percent of insured losses globally the first half of 2024. And in 2023, U.S. insured SCS-caused losses exceeded $50 billion for the first time on record for a single year.
Hailstorms are especially destructive, behind as much as 80 percent of SCS claims in any one year. Yet their relative brevity and limited scope compared to large-scale disasters earns them far less public and industry attention.
“We haven’t had a field campaign dedicated to studying hail in the United States since the 1970s,” Gensini explained, “so it’s been a long time since we’ve had our models updated and validated.”
Data-driven solutions
To rectify this knowledge gap, the In-situ Collaborative Experiment for the Collection of Hail in the Plains (or ICECHIP) will send Gensini and some 100 other scientists into the Great Plains to chase and collect granular data from hailstorms next year. Beyond developing hail science, their goal is to improve hail forecasting, thereby reducing hail damage.
Gensini pointed to another project, the Center for Interdisciplinary Research on Convective Storms (or CIRCS), which is a prospective academic industry consortium to develop multidisciplinary research on SCS. Informed by diverse partnerships, such research could foster resilience and recovery strategies that “move forward the entire insurance and reinsurance industry,” he said.
Rachlin and Fisher echoed this emphasis on enhancing the insurance industry’s facilitation of risk mitigation in their presentation on Hydronos Labs, an environmental software development and consulting firm that utilizes open-source intelligence (OSINT).
The costs and variability of climate and weather information have created “a data arms race” among insurance carriers, and aggregating and analyzing publicly available information is an untapped solution to that imbalance, they explained.
The company’s end goal, Rachlin added, is to promote an insurance landscape centered around “spending less money on [collecting] data and more money using data.”
All panelists stressed the ongoing need for more reliable, comprehensive data to steer industry strategies for effective mitigation. Investments in this data now are less than the costs of post-disaster recovery that will continue to plague more and more communities in our rapidly evolving climate.
Register here to listen to the entire webinar on demand.
Natural catastrophe perils’ rising frequency and severity may be impossible to fully abate, but Nationwide Property & Casualty Insurance Co. President and CEO Mark Berven believes modern building codes could dramatically reduce their costly destructiveness.
In a recent article for PropertyCasualty360, Berven wrote that inconsistent building codes create alarming safety disparities from state to state and that improved codes are essential to reducing risk and post-disaster recovery costs.
“Extreme weather events like heat waves, large storms, landslides and more are becoming more frequent and intense,” Berven writes. “The U.S. has already experienced at least 24 confirmed weather disaster events through October with losses exceeding $1 billion each.”
“Building Codes Save” — a landmark report by the Federal Emergency Management Agency (FEMA) –found that universal enforcement of modern building codes could prevent more than $600 billion in disaster losses by 2060. In states where stricter codes have been implemented, the report says, billion-dollar savings already have been realized.
Virginia and Florida, for example, have long-modeled robust building code systems, leading both to consistently top code adoption rankings – especially after the latter saved an estimated $1 billion to $3 billion in averted damages during Hurricane Ian through its modern Florida Building Code.
By contrast, fewer than one-third of hazard-prone jurisdictions have adopted modernized building codes, and some states – such as Delaware and Alabama – lack mandatory statewide building code systems entirely.
Perceived cost an obstacle
Barriers to adoption include the perceived expenses of enforcement. Conforming existing structures to the same standards as new buildings can be costly, as can rebuilding communities in non-hazardous areas. Navigating these concerns in tandem with an ongoing affordable housing shortage will require a coordinated effort on local, state, and federal levels.
But as the annual average of billion-dollar disasters in the U.S. trends upward, improving building codes must take precedence for policymakers at every level of government, Berven explained, adding that the research organization Insurance Institute for Business & Home Safety (IBHS) has already provided a versatile and relatively affordable outline for safer construction standards.
Known collectively as the FORTIFIED method, such standards reinforce the durability of homes against severe weather, involving, for example, anchoring roofs to wall framing using stronger nails. The FORTIFIED method is, at present, completely voluntary, though the insurance industry-funded Strengthen Alabama Homes incentivizes homeowners to retrofit their houses along these guidelines via thousand-dollar grants. Completed retrofits reduce post-disaster claims and qualify grantees for substantial insurance premium discounts, prompting flood-prone Louisiana to replicate the program.
Given the programs’ demonstrated success, “updating our building codes to align with proven frameworks like IBHS’s FORTIFIED standards is not just an option — it’s a necessity,” Berven wrote. “The time for action is now, and the cost of inaction is far too high.”
Many consumers are unaware of the current absence and potential benefits of building code regulations, he continued, emphasizing an industry need for greater public outreach. Building codes play an indispensable role in enhancing resilience against evolving climate and weather risks, but any “revolution” in their regulation cannot advance without the collaboration of all relevant stakeholders.
The need for collective action to address the property/casualty risk crisis was a recurring theme throughout Triple-I’s Joint Industry Forum in Miami – particularly during the panel on climate risk and resilience. The discussion focused heavily on what’s currently being done to address this evolving area of peril.
The panel, moderated by Veronika Torarp – a partner in PwC Strategy’s insurance practice – consisted of subject-matter experts representing a cross section of natural perils, from hurricanes and floods to wildfires and severe convective storms. They were:
Dr. Philip Klotzbach, research scientist in the Department of Atmospheric Science at Colorado State University;
Matthew McHatten, president and CEO at MMG Insurance and chairman of Triple-I’s Executive Leadership Committee;
Emily Swift, sustainable business framework senior manager at American Family Insurance; and
Heather Kanzlemar, consulting actuary at Milliman.
Part of the reason for this need to build coalitions is the diverse and overlapping causes of climate-related events and the related losses. Torarp cited a PwC study that projects the global protection gap in 2025 at $1.9 trillion, though she acknowledged that number may turn out to be “an understatement”.
Warmer, wetter, riskier
Running through the discussions of the various perils was the dynamic nature of evolving threats and the protection gap. Examples included increased inland flooding, such as the devastation caused in the rural southeast by Hurricane Helene, and damage inflicted by surprisingly intense tornadoes spun off by Hurricane Milton.
Dr. Klotzbach discussed the “very busy” 2024 Atlantic Hurricane season with its surprising impact on Asheville, N.C., and surrounding communities from Helene.
“It’s important to understand that the inland flooding threat is extremely problematic,” he said.
MMG’s McHatten emphasized the complexity of addressing flood risk, given the environmental forces driving it.
“Warmer planet, warmer ocean, more precipitation, more wind,” he said, “as well as this dynamic of atmospheric rivers and what happens to them as they start to hit higher elevations.” He pointed out how such conditions – which led to cataclysmic rains in Ashville as well as in MMG’s home state of Maine and the mountains of Vermont – are exacerbated by population trends.
“People live near water because that’s where economy and commerce was,” he said. “The ability to adapt to dynamic conditions that are changing rapidly is super-difficult. We can’t just say, ‘Raise every house six feet’ that’s near a body of water.”
Hope amid the perils
American Family’s Emily Swift discussed the state of severe convective storm risk, which she said is tending to migrate from its historic domain of the U.S. Midwest toward the Southeast.
“As we’re seeing the impact of hurricanes move further west and severe convective storms move further east, that means a lot more risk exposure to our customers who are living in those regions,” she said. “However, I think there’s a lot of hope.”
Swift talked about emerging partnerships between the insurance industry and academia — particularly work being done through Industry-University Cooperative Research Centers (IUCRC) funded by the National Science Foundation (NSF) to better understand severe convective storms and develop innovative ways of addressing the risks they pose.
“I’m optimistic that, although we don’t know quite the direction where severe convective storms are heading, we at least have diversified our risks to better manage them” – thanks, in part, to the learnings derived from these partnerships, Swift said.
Kanzlemar reinforced Swift’s optimistic tone in discussing Milliman’s work around wildfire risk. In the midst of a growing insurance availability and affordability crisis in fire-prone states – particularly California – Milliman is partnering with the Insurance Institute for Building and Home Safety (IBHS) and and stakeholders in its Wildfire Prepared Home program to gather data to help inform insurance underwriting, as well as mitigation and prevention at the community level.
“Most insurers have data on type of structure, what the roof material is, the number of stories,” Kanzlemar said, “but a lot of the granular data around eave enclosures, ember-resistant vents, that data is typically not available, and almost no insurers had that data at a community level to account for adjacent risk.”
That’s the bad news, she said, but “the good news is in the kinds of solutions we’re working toward. Most insurers were willing to consider a contributory data model like a comprehensive loss-underwriting exchange for [wildland-urban interface (WUI)] data as long as there’s sufficient participation and reciprocity. That’s an effort that we’re calling the ‘WUI Data Commons’. ”
All the panelists agreed that such collaborative, data-driven approaches that respect consumer needs and interests at the community level were going to be key to solving natural catastrophe risk in our rapidly changing future.
Triple-I’s Joint Industry Forum this week in Miami brought together subject-matter experts from across insurance, academia, government, and the nonprofit space to discuss climate resilience, legal system abuse, and – most important – what is being done and must continue to be done to ensure insurance availability and affordability during this period of evolving perils and policy challenges.
The insight-rich and engaging panels and “Risk Takes” will be generating Triple-I blog content for weeks to come. The following is a brief wrap-up.
While our times are “riskier than ever,” Triple-I CEO Sean Kevelighan pointed out that the U.S. property/casualty insurance industry “is well poised to manage these risks.” At the same time, he and many participants noted that collaboration and coalition building are critical for long-term success.
With respect to climate resilience, such collaboration is already taking place. Veronika Torarp, a partner in PwC Strategy’s insurance practice and moderator of the Climate Resilience panel, discussed the multi-industry coalition PwC is developing with Triple-I and other partners. Marsh McLennan’s managing director for public sector Dan Kaniewski – who moderated the Success Stories panel – discussed a project funded last year by Fannie Mae and managed by the National Institute of Building Sciences (NIBS) that culminated in a roadmap to incentivize investment in urban flood resilience across “co-beneficiary” groups.. Triple-I played an integral role in the NIBS project, which is currently seeking communities and partners for implementation of the roadmap.
In the area of legal system abuse, there was much conversation around the benefits to Florida of recent reforms in terms of making the Sunshine State more attractive to insurers again by discouraging excessive and fraudulent litigation. Legal system abuse is a multi-headed monster that drives up costs for everyone – from home and car owners to businesses and taxpayers – and, although progress has been made to fight it in Florida and elsewhere, it is expanding as quickly as those states are able to advance in tamping it down. Triple-I’s Dale Porfilio moderated a lively panel on the topic that included Louisiana Insurance Commissioner Tim Temple; Farmers Insurance head of legislative affairs Jeff Sauls; Viji Rangaswami, senior vice president and chief public affairs officer for Liberty Mutual; and Jerry Theodorou, policy director for finance, insurance, and trade at the R Street Institute.
Peter Miller, president and CEO of The Institutes, moderated the Innovation panel, which included Denise Garth, chief strategy officer at Majesco; Paul O’Connor, vice president of operational excellence at ServiceMaster; Kenneth Tolson, global president for digital solutions at Crawford & Co.; and Reggie Townsend, vice president and head of the data ethics practice at SAS. These subject-matter experts discussed how generative AI and other technologies are transforming insurance strategy and operations and increasing opportunities to improve and advance this most human-centered industry.
All four panels – as well as the Risk Takes and the “Fireside Chat” featuring Kate Horowitz, executive vice president of The Institutes, and Casey Kempton, president of personal lines for Nationwide Insurance – will be reported on in greater detail in subsequent posts.
The devastation wrought by Hurricane Helene in September 2024 across a 500-mile swath of the U.S. Southeast highlighted the growing vulnerability of inland areas to flooding from both tropical storms and severe convective storms, according to the latest Triple-I “State of the Risk” Issues Brief.
These events also highlight the scale of the flood-protection gap in non-coastal areas. Private insurers are stepping up to help close that gap, but increased homeowner awareness and investment in flood resilience across all co-beneficiary groups will be needed as more and more people move into harm’s way.
Helene dumped 40 trillion gallons of water across Florida, Georgia, the Carolinas, Virginia, and Tennessee, causing hundreds of deaths and billions in insured losses. Much of the loss was concentrated in western North Carolina, with parts of Buncombe County – home to Asheville and its historic arts district – left virtually unrecognizable. Less than 1 percent of residents in Buncombe County had federal flood insurance when Helene struck.
The experience of these states far inland echoed those of New York, New Jersey, and Pennsylvania in August 2021, when remnants of Hurricane Ida brought rains that flooded subways and basement apartments, with more than 40 people killed in those states.
“The whole swath going up the East Coast” that Hurricane Ida struck in the days after it made landfall “had less than 5 percent flood insurance coverage,” said Triple-I CEO Sean Kevelighan at the time.
Then, in July 2023, a series of intense thunderstorms resulted in heavy rainfall, deadly flash floods, and severe river flooding in eastern Kentucky and central Appalachia. Flooding led to 39 fatalities and federal disaster-area declarations for 13 eastern Kentucky counties. According to the Federal Emergency Management Agency (FEMA), only a few dozen federal flood insurance policies were in effect in the affected areas before the storm.
Low inland take-up rates largely reflect consumer misunderstandings about flood insurance. Though approximately 90 percent of all U.S. natural disasters involve flooding, many homeowners are unaware that a standard homeowners policy doesn’t cover flood damage. Similarly, many believe flood coverage is unnecessary unless their mortgage lenders require it. It also is not uncommon for homeowners to drop flood insurance coverage once their mortgage is paid off to save money.
Private insurers stepping up
More than half of all homeowners with flood insurance are covered by NFIP, which is part of FEMA and was created in 1968 – a time when few private insurers were willing to write flood coverage. In recent years, however, insurers have grown more comfortable taking on flood risk, thanks in large part to improved data and analytics capabilities.
The private flood market has changed since 2016, when only 12.6 percent of coverage was written by 16 insurers. In 2019, federal regulators allowed mortgage lenders to accept private flood insurance if the policies abided by regulatory definitions. The already-growing private appetite for flood risk gained steam after that. Private insurers are gradually accounting for a bigger piece of a growing flood risk pie.
Insurance necessary – but not sufficient
Insurance can play a major role in closing the protection gap, but, with increasing numbers of people moving into harm’s way and storms behaving more unpredictably, the current state of affairs is not sustainable. Greater investment in mitigation and resilience is essential to reducing the personal and financial losses associated with flooding.
Such investment has paid off in Florida, where the communities of Babcock Ranch and Hunters Point survived Hurricanes Helene and Milton relatively unscathed. Babcock Rance made headlines for sheltering thousands of evacuees from neighboring communities and never losing power during Milton, which devastated numerous neighboring cities and left more than three million people without power.
Both of these communities were designed and built in recent years with sustainability and resilience in mind.
Incentives and public-private partnership will be critical to reducing perils and improving insurability in vulnerable locations. Recent research on the impact of removing development incentives from coastal areas can improve flood loss experience in the areas directly affected by the removal of such incentives, as well as neighboring areas where development subsidies remain in place.
By Kelley Collins, Director of Business Development and Communications, Lightning Protection Institute
We rely on critical facilities not only in our day-to-day lives but also during emergencies and natural disasters. As defined by government agencies, such as FEMA, critical facilities include fire stations, police stations, hospitals, and emergency operation centers, among others. But here’s the question: Are these essential facilities in your community adequately protected from the destructive impact of lightning?
The Impact of Lightning on Structures
Lightning, though less publicized than other weather events, is equally destructive and must be understood so we can take preventive measures. Lightning strikes happen continuously, with approximately 100 strikes per second globally. Each strike unleashes a tremendous amount of electricity, with millions of volts and temperatures soaring higher than the surface of the sun. When a structure is struck, the surge of electricity travels through its pipes, electrical systems, and infrastructure. While lightning often causes fires, the less visible damage can be just as severe. Computers, communication devices, security systems, and other critical electronics can be rendered useless, leading to loss of data, revenue, and the ability to provide vital services.
A strike to a critical facility can prevent essential services from being available when they’re needed most.
A single lightning strike can have devastating effects on individuals, homes, businesses, and entire communities, including critical facilities. A lightning strike to a critical facility can prevent essential services, such as emergency response or medical care, from being available when they are needed most. A well-designed and properly installed lightning protection system can prevent these consequences.
Whether you are a homeowner, business owner, or part of the design and construction industry, it’s essential to understand the impact of lightning and the steps necessary to mitigate the risk. The Lightning Protection Institute has started to advocate for stronger regulations for critical facilities, particularly in high-risk areas where the potential for lightning strikes is greater.
The Need for Regulatory Requirements
Despite the constant threat of lightning, regulatory requirements for lightning protection systems in critical facilities remain minimal. A historical look at other life safety actions could give us the foundation to protect critical facilities from lightning, which we know can create fires.
When looking to safeguard individuals and buildings from fire, fire alarms and sprinkler systems have been implemented. Fire alarms alert individuals of smoke and/or fire to ensure that they exit the building. Sprinkler systems were designed to minimize the spread of a fire and damage to the structure. Depending on states, either or both, fire alarms and sprinkler systems are required in commercial properties and/or homes.
Just as fire alarms and sprinkler systems are mandated to prevent building destruction and protect lives, lightning protection systems should be required for the same reasons. Lightning protection systems protect both lives and structures.
There are government documents that outline what is considered a critical facility and what structures are encompassed in our critical infrastructure. In addition, these federal agencies clearly see the need for higher standards in critical facilities and critical infrastructures due to their guidelines for protecting against potential flooding. Yet, there is not a mandate to protect either facilities or infrastructure from lightning strikes.
Lightning: Second Only to Floods
Lightning is the second most damaging natural hazard after floods, impacting both individuals and communities. The same level of consideration given to flood prevention should apply to mitigating the risks of lightning. Installing lightning protection systems in critical facilities ensures these buildings remain operational during and after a strike, safeguarding the community.
Introducing regulatory requirements for lightning protection in high-risk areas would ensure that critical facilities continue to function during emergencies, providing vital services when they are needed most.
Conclusion: Lightning Deserves Our Attention
With the potential for destruction that lightning carries, it deserves as much attention as hurricanes, floods, and fires, which often dominate the headlines. We’ve taken significant steps to prepare for and protect against these natural disasters through regulations and personal actions.
The design and construction industries continue to innovate with new materials and techniques to increase the safety of individuals and communities when building new structures. Fire alarms and earthquake-resistant buildings are now standard safety measures, and hurricane-resilient homes are being built with new designs. These advancements result from collaboration across industries.
The next collaboration should be the initiative to protect communities from the impact of a lightning strike. This initiative involves implementing regulatory measures for lightning protection systems to safeguard critical facilities. Lightning protection systems intercept a lightning strike and safely disperse the energy along the conductors to ground. When properly installed by certified lightning protection contractors, these systems are scientifically proven to mitigate risks for homes, businesses, and critical facilities and infrastructure.
Several industries have the opportunity to provide their insight and expertise to protect communities: Architects, Engineers, Insurance Providers, Risk Assessors, Weather Researchers, Local Governments as well as Lightning Protection Professionals. As experts in various fields, we can protect our communities by raising awareness of lightning risks and advocating for the installation of certified lightning protection systems.
The next time you pass by a fire station, police station, or hospital in your community, take a moment to look up. Is there a lightning protection system installed? It’s critical to ensure these essential facilities are protected, especially in high-risk areas, so they can continue serving individuals and communities during and after a storm.
