A bill that would extend the Terrorism Risk Insurance Act (TRIA) through 2034 recently cleared a U.S. House committee with strong bipartisan support, offering hope for the program’s renewal later this year.
Enacted in 2002 after the Sept. 11, 2001, attacks, TRIA created a federal backstop that shares catastrophic terrorism losses between insurers and the government, allowing private insurance markets and other industries to remain stable while absorbing such events. Congress has reauthorized TRIA four times since its inception, and no events have yet triggered the backstop.
With TRIA scheduled to expire at the end of 2027, many commercial property/casualty insurers are already preparing for the program’s potential lapse, driving risk and insurance leaders to urge proactive legislation ensuring its continuation.
“American businesses must be provided with the essential coverage to successfully operate in today’s uncertain global environment,” said Will Melofchik, CEO of the National Conference of Insurance Legislators, in a statement on the bill last year. “Failure by Congress to extend TRIA would likely result in the inability of insurers to offer coverage for future catastrophes resulting from terrorism, making terrorism risk insurance unavailable and unaffordable.”
Testifying on behalf of the National Association of Insurance Commissioners (NAIC), former Connecticut Insurance Commissioner and NAIC past president Andrew N. Mais said, “Businesses and consumers that live, work, and shop in communities in every state benefit from a stable insurance sector, which provides commercial terrorism insurance only because TRIA exists as a backstop.”
“Absent TRIA or a similar solution, we do not believe private insurance carriers would make meaningful capacity for affordable commercial terrorism coverage available,” Mais added.
Though the bill may evolve as it passes through the full House and Senate, it currently would raise the minimum loss threshold of $5 million to $10 million in 2029, as well as introduce a transparency measure that requires the Treasury Department to publish a notice in the Federal Register no less than 30 days after beginning the terrorism determination process.
Amid federal funding and staffing cuts to major science agencies last year, various nonprofit organizations stepped up to maintain their essential climate and weather research. Such risks may become increasingly difficult to predict and prevent, however, as key agencies, such as the National Center for Atmospheric Research (NCAR), remain targets for disinvestment or termination.
Private sector takes charge
In the spring of 2025, the federal administration attempted to rescind tens of billions of dollars in research and hazard mitigation grants, leaving many programs – like FEMA’s Building Resilient Infrastructure and Communities (BRIC) program – in legal limbo as legislators continue to debate their futures. Alongside funding delays and cancellations, mass firings led to the shuttering of several climate and weather information resources – until private associations and researchers mobilized to revive them.
Former NOAA staffers, for instance, regrouped to rescue the organization’s climate.gov website, which attracted nearly one million visitors per month – including teachers, policymakers, and media outlets – before being dismantled last June. Under a new domain, the site will both restore deleted information and resume tracking and explaining the effects of climate risk to public audiences, relying exclusively on nonprofit funding, according to project director Rebecca Lindsey in an interview with NPR.
Similarly, nonprofit Climate Central recently released its first billion-dollar weather and climate disaster report since assuming responsibility for that dataset, which former NOAA climatologist Adam Smith continues to oversee. Beyond rebuilding NOAA’s database, the organization aims to expand upon it in the coming years to track smaller catastrophes, providing insurers and other stakeholders more reliable information to understand individual disasters.
An initiative spearheaded by the American Geophysical Union (AGU) and the American Meteorological Society (AMS) is now aiming to help fill research gaps left by the elimination of the National Climate Assessment (NCA), a series of congressionally mandated reports published since 2000 to inform climate risk mitigation strategies for municipalities and businesses. Though not intended to replace NCA, the new data collection “provides a critical pathway for a wide range of researchers to come together and provide the science needed” to “ensure our communities, our neighbors, our children are all protected and prepared,” said AGU president Brandon Jones.
Grassroots efforts to archive federal climate databases and tools before they disappear have also gained traction around the globe to ensure these resources remain publicly available. The nonprofit Open Environmental Data Project, for example, saved a now-deleted tool to identify communities disproportionately impacted by climate and weather risks through its Public Environmental Data Project.
Crucial agencies under scrutiny
While the latest government spending package has largely spared science funding from further reductions, the Trump administration had proposed cuts amounting to a 21 percent drop from fiscal 2025 levels. Other agencies face potential dissolution, particularly NCAR – widely considered the largest federal climate research program in the U.S.
Managed by the University Corporation for Atmospheric Research (UCAR) in collaboration with the National Science Foundation (NSF), NCAR houses advanced computing and modeling systems to support weather forecasts, mitigation planning, flood mapping, and other datasets needed across the transportation, engineering, utility, and risk and insurance industries.
Describing NCAR’s research as critical to “protecting lives and property, supporting the economy, and strengthening national security,” UCAR president Antonio Busalacchi said in a statement that “any plans to dismantle NSF NCAR would set back our nation’s ability to predict, prepare for, and respond to severe weather and other natural disasters.”
“NCAR datasets have been vital in improving our understanding of the atmosphere and ocean,” said Phil Klotzbach, lead author of Colorado State University’s seasonal hurricane forecasts and Triple-I Non-Resident Scholar. “These tools have been critical input to CSU’s seasonal hurricane forecasts for over 25 years.”
NCAR’s pending fate coincides with a recent study from the University of Florida that suggests the budget cuts in part reflect pervasive distrust in scientific institutions, necessitating stronger efforts to communicate the value of scientific work to the public. But as more independent groups take on the responsibilities once affiliated with federal organizations, building public relationships may prove even more challenging, posing uncertain implications for the future of climate and weather data as a whole.
Though producing no U.S. landfalls for the first time in a decade, the 2025 Atlantic hurricane season generated deadly tropical storms, above-average days of major hurricane activity, and millions in economic losses, underscoring the enduring community preparedness required against this evolving peril.
Among the five hurricanes that did form, four reached Category 3 strength or higher, including three Category 5 storms – marking only the second year on record that more than two such storms occurred in the Atlantic. A new Triple-I Issues Brief examines their impacts and how they align with emerging climate and weather trends, particularly within inland areas hit by flooding from remnants of the storms.
Flood exposure spreads inland
While not to the scale of U.S. hurricanes in 2024, the year’s tropical storms were similarly destructive, with remnant moisture from Tropical Storm Chantal contributing to $500 million in damage, Gallagher Re estimates. In many affected North Carolina counties, less than 1 percent of households were covered by the National Flood Insurance Program (NFIP), highlighting a growing flood protection gap in areas once considered low-risk.
Demographic shifts also play a crucial role in the devastation as more people move into harm’s way and build their homes bigger and more expensive than before. While various flood-prone areas along the coasts lost more residents than they gained in 2024 – for the first time since 2019 – it is critical to remind home and business owners about rising flood risks throughout the country and the importance of staying protected.
Stronger, wetter weather
Warming oceans also fuel “rapid intensification,” or an increase in maximum sustained winds by at least 35 mph in a 24-hour period. Since 1980, over 80 percent of landfalling U.S. hurricanes – altogether costing at least $5 billion in damages – underwent rapid intensification at some point during their lifecycle, according to a 2025 American Geophysical Union (AGU) study.
Describing rapid intensification events as “a pronounced increasing trend,” AGU study coauthor Dr. Phil Klotzbach – a senior research scientist in the Department of Atmospheric Science at Colorado State University and Triple-I non-resident scholar – said such storms “tend to weaken at a slower rate as they move inland,” compounding challenges for residents who “aren’t necessarily as prepared as they should be.”
Hurricane Melissa – 2025’s strongest and deadliest storm – showcased the toll from this mounting intensity. Claiming more than 100 lives across the Caribbean, Melissa rapidly intensified before hitting Jamaica as a Category 5 hurricane, becoming one of the fastest-intensifying Atlantic storms ever recorded and the most powerful hurricane to make landfall in the country’s history.
Cutting-edge analytics
As advances in computing power and data collection have improved traditional tools in recent years, forecasters and insurers have built up their arsenal to combat the unpredictability of climate and weather risks. For instance, barometric pressure – found both more accurate and easier to gauge than the wind speeds traditionally used to predict storm damage – served as the primary trigger for a $150 million parametric policy for Jamaica which paid out in full after Hurricane Melissa.
“Displaying the kind of predictive power that can help insurers price risk and mitigate costly claims, these technologies can inform conversations at all levels to encourage investment in resilience,” the brief states.
As property owners grapple with mounting repair and replacement costs, a backlog of needed upkeep continues to grow, with public buildings alone facing a deferred maintenance cost of nearly $100 billion across states, according to recent Pew estimates. Left unaddressed, these maintenance gaps can escalate into greater damages and more expensive repairs when catastrophes happen, leading to costlier claims.
Digital platform HelixIntel aims to bridge the gap by helping businesses and organizations create maintenance strategies in partnership with the insurers who protect them. Offering a “one-stop” approach to maintenance management, the platform can capture real-time risk data while streamlining maintenance organization and productivity, driving safer behaviors and preventative practices before facilities or equipment break down.
“What we’ve seen is that everyone wants to be involved and know what they can do to help,” said CEO and co-founder Jon DeWald, in an Executive Exchange interview with Triple-I CEO Sean Kevelighan. “What we’re working on is really showing that there’s two teams – both properties and insurers, who have the same mission in mind – and being able to provide tools that allow them to collaborate.”
Noting the unique maintenance required across various industries – from “large school districts with facility directors” to small businesses “where one person takes care of everything” – DeWald discussed how HelixIntel maximizes its impact by working directly with insurers, who then distribute the platform to their customers. The platform teamed up with Hartford Steam Boiler (HSB), for instance, to support policyholders with equipment breakdown coverage.
Beyond helping lower the cost of entry to new tech for consumers, such partnerships allow the platform to leverage the comprehensive data that insurance carriers have access to, facilitating predictive recommendations rather than purely reactive maintenance, DeWald explained.
“We’ve been saying for some time at Triple-I that the insurance industry is shifting from just detecting and repairing after a catastrophe to now predicting and preventing,” said Kevelighan, adding that, by quantifying maintenance, innovators like HelixIntel enable insurers and consumers to “really understand the return on their own investment.”
Quantifying the benefits of maintenance investments is also essential to inform effective risk mitigation and resource allocation for policymakers, who often lack insight into the impacts of deferred maintenance due to insufficient data collection and reporting. Tracking asset health, maintenance tasks, and other property-specific data through a centralized management system can help state facilities identify overdue repairs and develop long-term maintenance planning, fostering more resilient communities.
Though once regarded as a “cost center,” maintenance and other risk management initiatives are “moving more and more into the actual business strategy, so that businesses and the insurance companies that are focused on those businesses are able to prevent those losses and keep businesses open,” Kevelighan concluded.
Millions of Americans remain on alert for a severe weather outbreak across the country after devastating atmospheric rivers, tornadoes, and winter storms raged at the close of 2025, causing multiple deaths and significant property damage from coast to coast.
Southern California saw its wettest Christmas Eve and Day ever recorded, with more than 17 inches of rainfall in one area of Ventura County and 10 inches in parts of the San Gabriel Mountains in Los Angeles County. Downing trees and power lines, the heavy rains triggered flash flooding and mudflows that hit hundreds of homes, prompting road closures and power outages throughout the state.
Another unusual weather system spawned 13 tornadoes across the Great Lakes in late December, with six in Central Illinois alone, damaging numerous homes. Prior to last year, only five December tornadoes had been recorded in that forecast area, the last of which occurred in 2021. Frigid cold conditions followed the storm as a bomb cyclone – part of the same system that drenched California – swept from the Midwest to the East Coast.
Defined as a rapidly intensifying non-tropical storm in which pressure drops by at least 24 millibars over a 24-hour period, the bomb cyclone generated blizzard conditions resulting in power outages for more than 300,000 customers and a massive Interstate pile-up involving over 50 cars and multiple semi-trucks in Detroit, Mich. Several feet of snow buried Upstate New York, with the hardest-hit areas in the Lake Ontario snowbelt.
As conditions begin tapering off on the West Coast, the first cross-country storm of 2026 is expected to bring torrential rain and snow in the South and much of the Midwest later this week. Threats of flash flooding as well as hail, tornadoes, and damaging winds loom across both regions, with heavy rains possible in the Northeast.
As always, Triple-I urges residents to stay informed, be prepared, and follow the instructions of local authorities. Checking insurance coverage is critical to such preparation, especially as atmospheric rivers, severe convective storms, and inland flooding become increasingly common. Many noncoastal communities impacted by recent flood events lack sufficient flood protection, and Californians grappling with claims from the storms may also be unaware they need separate flood policies for flooding and mudflow.
In a year marked by severe convective storm-induced damage across the United States, timely and accurate data is more essential than ever to understand, predict, and prevent these evolving weather perils. Though federal cuts to weather monitoring and modeling have raised concerns about the industry’s capacity for risk mitigation, a new research center backed by insurers and the U.S. National Science Foundation (NSF) aims to help bridge the gap.
Directed by Dr. Victor Gensini, a professor at Northern Illinois University and a Triple-I non-resident scholar, the Center for Interdisciplinary Research on Convective Storms (CIRCS) will leverage the expertise of nearly two dozen scientists to develop research focused on advancing resilience against severe convective storms, which range from thunderstorms with lightning to tornadoes, straight-line winds, and hail.
Northern Illinois University and the University of Wisconsin-Madison launched CIRCS with $1.5 million in funding from NSF, as part of a joint initiative with the National Oceanic and Atmospheric Administration (NOAA) to create an Industry-University Cooperative Research Center (IUCRC) that can support the insurance sector.
Beyond funds under the IUCRC model, CIRCS also receives “funding for research, students, and lab equipment” from private industry members, most of whom are “insurance and reinsurance companies interested in research on convective storms,” said Gensini, who teaches in NIU’s Department of Earth, Atmosphere, and Environment. He added that CIRCS includes actuarial scientists within its panel of experts to “approach this specific peril from multiple directions.”
Rising in both frequency and severity, convective storms accounted for $42 billion in global insured losses during the first half of 2024 alone, driven by 12 U.S. storms with $1 billion or more in losses each, according to a Swiss Re report. Later Gallagher Re data supports the trend, with large U.S. thunderstorms contributing to $46 billion in insured losses through the third quarter of 2025, the fourth-costliest year on record.
Paradigm-setting research
In addition to the center’s launch, Gensini recently celebrated a major data haul gathered during the largest hail study ever conducted, known as ICECHIP – short for In-situ Collaborative Experiment for Collection of Hail in the Plains. Funded with an $11 million grant from NSF, the field study sent Gensini and more than 100 other scientists and students across the Great Plains to chase and analyze hailstorms, which facilitate as much as 80 percent of severe convective storm claims in any one year.
Collecting more than 10,000 stones for study, the researchers hope to reduce hail risk through improved forecasting, enabling residents to better protect themselves and their belongings before a hailstorm hits. As the first field campaign dedicated to studying hail since the 1970s, ICECHIP’s participants expect their data to inform research analysis for years to come, NIU reported.
“We recovered tennis-ball-sized hail or greater in about half of our instrument deployments,” Gensini said. “You hope and dream for these kinds of observations in order to push forward hail science.”
By partnering academia with industry and government agencies, CIRCS and ICECHIP showcase the kinds of collaborative, data-driven solutions needed to address climate risks in ways that respect the unique needs of all affected groups, fostering risk management strategies that can build resilience at a community level.
Severe convective storms cost insurers an estimated $46 billion in the first three quarters of 2025, Gallagher Re has reported, marking the third straight year of U.S. claims from these events through September exceeding $40 billion. Total losses from these storms – which include tornadoes, hail, straight-line winds, and drenching thunderstorms – reflect growing impacts from inland flooding and, in particular, the vulnerability of roofs to damage from these storms.
Approximately 70 to 90 percent of total insured residential catastrophic losses arise from roof-related damage, according to Insurance Institute for Business & Home Safety (IBHS) estimates. Though poorly maintained roofs contribute to this finding, outdated building codes exacerbate the risk, leading insurance industry leaders to advocate for widespread adoption of FORTIFIED roof standards.
Developed by IBHS, FORTIFIED standards can reduce severe weather damage in new or retrofitted homes through construction methods like sealing roof decks and anchoring roofs to wall framing using stronger nails. While such standards remain voluntary, Louisiana has modelled the proactive approach needed to facilitate adoption with the recent expansion of its Louisiana Fortify Homes Program, which began offering homeowners thousand-dollar grants to retrofit their houses along these guidelines in 2023, incentivizing roughly 40 percent of the now 10,000 FORTIFIED roofs in the state.
“FORTIFIED roofs are the long-term solution for affordable insurance in South Louisiana,” said state insurance commissioner Tim Temple, noting that his office aims to implement bigger and more standardized insurance discounts for FORTIFIED homeowners to reinforce the state’s already improved insurance rates.
An emerging trend
Though Louisiana became the “fastest-growing state” to adopt FORTIFIED standards, Alabama pioneered incentivizing them through its own Strengthen Alabama Homes program, financed by the insurance industry with more than $86 million in grants since 2016. Designed to enhance community resiliency while also lowering insurance rates, completed retrofits qualify residents for premium discounts ranging from 25 to 55 percent.
A May 2025 study from the Alabama Department of Insurance, in collaboration with the University of Alabama Center for Insurance Information and Research, showcases the program’s success, highlighting that FORTIFIED homes suffered less property damage and fewer insurance claims than homes built using other construction methods when Hurricane Sally made landfall in the state.
“The Center’s Hurricane Sally report doesn’t just quantify the effectiveness of the FORTIFIED program, it clearly demonstrates that homes can be built to survive storms, making them eminently more insurable,” said IBHS CEO Roy Wright. “This report should be a clarion call to communities across the country, urging them to implement Alabama’s multipronged approach to promoting disaster mitigation.”
Insurers answered the call in Oklahoma, North Carolina, and South Carolina, all of which boast similar programs backed by the insurance sector and accompanying premium reductions. Mississippi nearly joined their ranks before state funding for the grant program was suspended earlier this year, though insurance discounts remain available. States such as Florida, Georgia, and Minnesota also offer comprehensive insurance discounts for FORTIFIED properties, with the latter poised to fully replicate a grant program in response to mounting hailstorms.
Addressing cost concerns
While 75 percent of homeowners express willingness to invest in weather-resistant features, only 18 percent have reinforced or replaced their roofs with those materials, a recent Nationwide survey reveals. Grants help lower the cost of entry to FORTIFIED roofs for many homeowners, but it is worth noting the relative affordability of such upgrades, which can cost as little as $500 for a 2,000 sq. ft. home.
Describing the benefits of FORTIFIED standards as “measurable and increasingly essential,” Nationwide Property & Casualty president and COO Mark Berven emphasized the crucial role insurance agents play in raising consumer awareness of these risk reductions and their broad accessibility.
“Our industry needs to remind homeowners they have control in the face of severe weather events,” Berven wrote. “By investing in resilience, they can take an active role in protecting their homes, their valuables and their memories – giving them the peace of mind they’re looking for.”
Jamaica will receive a $150 million payout following devastation from Hurricane Melissa from its parametric catastrophe policy. Though one of the largest such payouts in recent years, the loss “had very little impact” on investors in the bonds backing the policy.
Investors in insurance-linked securities (ILS) “understand that these risks are part of what they cover,” said Jean-Louis Monnier, head of ILS Alternative Capital Partners at Swiss Re.
Among the strongest Atlantic hurricanes ever recorded, Hurricane Melissa became the most powerful cyclone to make landfall in the island’s history, causing an estimated $6 billion to $7 billion in damages and at least 75 deaths across the Caribbean. With a minimum central pressure of 892 millibars, the storm met the parametric thresholds for a full payout. The policy was backed by a bond issued in 2024 by the World Bank through its International Bank for Reconstruction and Development (IBRD) and structured by Aon Securities and Swiss Re Capital Markets.
Unlike traditional indemnity insurance, parametric insurance covers risks without sending adjusters to evaluate post-catastrophe damage. Rather than paying for damages incurred, policies pay out if certain conditions are met – for example, if wind speeds or rainfall measurements meet an established threshold. Speed of payment and reduced administration costs can ease the burden on insurers while expediting recovery for policyholders.
Determining appropriate parametric triggers is no easy task. Just a year earlier, the same policy did not pay out after air pressure levels narrowly missed the predefined minimum during Hurricane Beryl, despite widespread destruction. The ensuing backlash generated greater public and industry scrutiny over parametric coverage, including an intergovernmental “examination” into the ILS market broadly.
Monnier explained that this specific bond was designed to respond to larger events like Melissa, as part of the country’s extensive risk management strategy that encompasses many layers of protection. Parametric coverage from Skyline Partners and Munich Re, for instance, offered a partial payout after Beryl, as did the Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company, which issued its largest single payout in history at $70.8 million after Melissa.
In a press release on the payout, World Bank vice president and treasurer Jorge Familiar emphasized the “proactive approach” of Jamaica’s disaster risk management, noting it could “serve as a model for countries facing similar threats and seeking to strengthen their financial resilience to natural disasters.”
Estimated to reach $34.4 billion by 2033, the global parametric insurance market is growing at a rapid pace, driven by increasingly severe climate and weather-related risks. Yet many industry leaders identify parametric structures as less comprehensive – and therefore not a substitute for – traditional indemnity risk transfers. By design, parametric insurance correlates to measurable events rather than actual damages, leading to an innate basis risk when the two do not perfectly align.
Whereas indemnity coverage is “generally preferable,” parametric structures can “complement other forms of insurance” and are particularly beneficial for sovereigns, which tend to lack the granular data needed to inform underwriting and pricing of indemnity catastrophe bonds, according to Monnier.
“Many countries use both instruments, and they can be very complementary,” Monnier concluded. “There is a large global protection gap, and Swiss Re advocates for reducing that gap, whether through traditional reinsurance or by structuring capital-market solutions.”
With last week’s end of the longest U.S. government shutdown in history, Congress reauthorized FEMA’s National Flood Insurance Program (NFIP).
During the shutdown, the NFIP continued to pay claims using available funds, but it could not sell or renew policies until reauthorized. These restrictions affected an estimated 1,300 property sales each day, as prospective property owners must purchase flood coverage in Special Flood Hazard Areas (SFHA), where private flood options – despite gaining traction – are still limited.
With millions of homeowners and countless communities relying on the NFIP, many organizations across the risk and insurance industry sent a letter urging congressional leaders to reauthorize NFIP ahead of its expiration, writing that a lapse “could further impact affordable housing, create additional challenges for small businesses, unnecessarily further increase the cost of homeownership, and must be avoided.”
While reauthorization allows NFIP insurers to retroactively issue policies for applications received during the shutdown, the measure extends their authority only through Jan. 30, 2026, leaving the program’s fate an open question. Absent a long-term NFIP authorization bill, Congress has now reauthorized the program 34 times since fiscal year 2017.
Incentivizing risk reduction
Flood risk was long considered untouchable by private insurers, which is a large part of the reason NFIP exists. While private participation in the flood market has grown in recent years, NFIP remains a critical source of protection for this growing and underinsured peril.
Beyond providing economic protection for policyholders, the NFIP also plays a critical role in promoting climate resilience, particularly through its Community Rating System (CRS). A voluntary program, the CRS rewards homeowners with premium discounts when their communities invest in floodplain management practices that exceed the NFIP’s minimum standards, with the program’s highest rating qualifying residents for a 45 percent premium reduction.
After the cancellation of other FEMA-managed initiatives like BRIC, the CRS can help provide relief where still needed. For instance, Jefferson Parish homeowners displaced following Hurricane Ida in 2021 had secured BRIC grants to elevate and reconstruct their homes shortly before the program ended, leaving these projects in limbo. But the CRS now offers residents and businesses more than $12 million in flood insurance savings annually after the parish secured a Class 3 rating – the first of its kind in Louisiana.
By incentivizing improved building codes, citizen awareness campaigns, and other resilience solutions, the CRS can ensure that vulnerable communities “will continue to benefit from a comprehensive floodplain management and mitigation plan that helps make us more resilient in the face of disasters,” said Jefferson Parish President Cynthia Lee Sheng in a statement. Notably, however, the parish earned its rating mere weeks ahead of the NFIP lapse, which delayed the discounts from appearing in new and renewed policies.
As climate and weather-related events become increasingly frequent and severe, the success of these investments will depend on proactive strategies informed by timely, granular data. Though NOAA announced it would cease tracking the country’s costliest disasters earlier this year, nonprofit Climate Central aims to fill the gap by rebuilding NOAA’s database and expanding it to track smaller catastrophes, providing insurers and other stakeholders more reliable information to understand individual disasters.
Taken together, such efforts can help insurers accurately reflect rising risks in insurance pricing while engaging with communities and businesses in solutions to keep coverage accessible. Sustaining this balance involves continuous collaboration between public and private sectors.
An atmospheric river system dumped up to six inches of heavy rains and claimed multiple lives in California last weekend, with thunderstorms on the horizon posing outsized risks for communities still recovering from January’s devastating wildfires.
Triggering mudflows and flash flooding across streets and highways, the multiday storm highlights the added complexity of insuring and preventing disasters in the state’s many wildfire-prone areas.
Coverage confusion
Californians grappling with this destruction may be unaware that homeowners and commercial policies typically exclude flood, mudslide, debris flow, and similar catastrophes, or of the distinctions between these events. Though media outlets may use these terms interchangeably, insurers differentiate between mudflows and mudslides for coverage eligibility.
Essentially rivers of mud, mudflows are covered by flood insurance, which is available from FEMA’s National Flood Insurance Program (NFIP) and a growing number of private insurers. Mudslides – or masses of rock and earth pulled downhill by gravity – typically do not involve much liquid and remain ineligible for flood coverage.
But if recent perils covered by standard insurance policies either directly or indirectly cause any of these events, insurers must cover ensuing damages, as explained in a notice from California Insurance Commissioner Ricardo Lara shortly before the storms. Such protections can help residents bracing for possible mudslides later this week – particularly those living in Southern California neighborhoods scorched by wildfires earlier this year.
Noting that “it is critical to prepare for flooding, mud, and debris flow when heavy wind and rain, also called atmospheric rivers, are forecast,” Janet Ruiz – Triple-I’s California-based director of strategic communication – advises policyholders to “check your insurance coverage, as you will need a separate flood policy for flooding and mudflow. Use sandbags – most communities provide them free of charge. Be safe, and don’t drive into flooded areas.”
These recommendations are especially vital for fire-scarred areas, where heat-damaged soil repels water and even minor showers can escalate into dangerous flash flooding and debris flows. An absence of vegetation to absorb rain exacerbates both, leaving nearby homes, businesses, and other infrastructure more vulnerable.
From one system to another
Beyond facilitating substantial flooding, the wet weather also weakened elevated fire conditions that emerged during the fall – a reoccurring interplay in California’s climate that complicates developing effective mitigation and resilience strategies. Within the Golden State alone, factors like temperature, humidity, wind, and topography vary too widely to apply a singular mitigation approach, underscoring the importance of property-specific data analysis.
Using case studies from three distinct California areas, research from Triple-I and Guidewire shows how granular data can help identify properties with attractive risk profiles despite these evolving risks. Noting “every property being assessed for wildfire risk is unique,” their report found that home hardening reduces wildfire damage by as much as 70 percent but emphasized proactive collaboration between insurers, regulators, and policyholders as key to long-term success.
With more people moving into the wildland urban interface and communities increasingly hit with inland flooding, such partnerships are crucial to bridge protection gaps while keeping insurance affordable and available.
