As the insurance industry grapples with retirements and the challenge of attracting talent, forward-thinking insurers are finding success by combining traditional mentorship with cutting-edge technology, according to Triple-I’s latest Executive Exchange.
The “Ascend” Approach to Talent Development
David Corry, who heads Casualty for Argo Group, told Triple-I CEO Sean Kevelighan that the company’s “Ascend with Argo” program offers a blueprint for effective talent recruitment and retention. Rather than hoping young professionals will stumble into insurance careers, Argo actively partners with brokers to create meaningful experiences for early-career workers.
By offering shadow days, continuing education, and direct access to industry leaders, programs like Ascend make insurance careers tangible and appealing.
“Last month, we hosted a dozen young career brokers in our New York City office,” Corry said. “They spent a day with our underwriters and heard from senior leadership—giving them real exposure to how carrier operations work from the inside.”
Technology as a Talent Magnet
Cutting-edge technology – including generative AI – is transforming how insurers operate, as well as helping them attract tech-savvy talent who might otherwise overlook the industry. This creates what Corry calls “two-way learning,” with experienced professionals teaching industry fundamentals while younger workers contribute innovation skills. It’s a win-win that makes insurance careers more attractive to digitally minded professionals.
What ties these efforts together is authentic leadership focused on people rather than personal advancement.
“A strong leader is someone who’s in it for the people they work with, not for themselves,” Corry emphasizes.
The insurance industry’s talent challenge is real, but companies are addressing it by combining innovative programs, mentorship, and technology adoption – demonstrating that insurance careers offer both stability and cutting-edge opportunities for the next generation of professionals.
By Sayon Deb, Director of Insights, UL Standards & Engagement
In just five years, lithium-ion battery fires linked to e-mobility devices have evolved from a fringe risk into a mainstream safety and liability crisis – particularly in dense urban areas, like New York City, where adoption of these devices has outpaced regulatory safeguards.
In addition to the obvious public safety threat, e-mobility battery related fires represent a significant and expanding liability exposure for insurers, property managers, and city agencies. Our latest report – developed in collaboration with Oxford Economics – sets out to answer a more fundamental question: What is this crisis truly costing the city?
The answer, conservatively estimated, is up to $519 million in combined human and economic loss between 2019 and 2023. This figure includes fatalities, injuries, and structural property damage
Why Now? Why New York?
The dramatic rise in fire incidents – an estimated eightfold increase from 21 in 2019 to as many as 187 incidents in 2023 – correlates strongly with the influx of low-cost, uncertified e-bikes and scooters. New York City’s unique combination of traffic congestion, delivery-based gig work, and dense multi-family housing has made it a case study in how quickly innovation can outstrip risk management.
Data from the Fire Department of New York, the Consumer Product Safety Commission, and UL Solutions’ Lithium-Ion Battery Fire Incident Database formed the foundation of our modeling. This helped us generate incident estimates of fatalities, injuries, and structural properties damages.
Oxford Economics translated these incident reports into cost estimates using a rigorous, conservative methodology by applying federal valuation metrics for loss of life and injury. Fatality costs were calculated using the U.S. Department of Transportation’s Value of a Statistical Life, set at $13.2 million per life as of 2023. Non-fatal injury costs were derived as severity-weighted fractions of that value, ranging from minor injury to critical injury, in accordance with DOT and Office of Management and Budget economic guidance.
Our analysis then integrated structural fire cost benchmarks from both Triple-I and the National Fire Protection Association. Triple-I’s data was particularly important in defining the upper-bound estimates for property loss. Claims data on the average insurance payout for residential fire damage provided a grounded, actuarial counterweight to NFPA’s generalized national averages.
This dual-source approach allowed us to capture a more realistic range of likely losses across different housing types, from NYCHA public units to private homes.
A growing blind spot for insurers
From a risk-modeling standpoint, e-mobility fire incidents don’t map easily to conventional insurance categories. Many e-mobility users, particularly gig economy workers, rely on leased, used, or modified e-bikes and e-scooters to meet delivery demands. Some of these devices are powered by third-party or uncertified batteries or, in some instances, contain second-hand components. This creates a messy risk environment in which it’s hard to know who owns what, how it has been maintained, or how it’s being used. Moreover, fires resulting from these devices often fall outside the scope of standard product warranties or manufacturer responsibility. This makes it difficult to determine who’s responsible when something goes wrong.
For insurers, this presents a growing blind spot. Traditional assumptions around property and contents coverage did not include high-risk devices charged in hallways or shared living spaces or for ignition sources that are not part of conventional product recall channels.
A $300 imported battery with no certification can trigger a six-figure claim, and those risks are becoming more common.
The Path Forward
Regulatory momentum is improving. New York City’s Local Law 39, signed in 2023, bans the sale and lease of uncertified e-mobility devices. In July 2024, New York Governor Hochul enacted additional statewide measures to support battery safety and user education. Federal legislation aimed at establishing nationwide safety requirements for lithium-ion batteries used in e-bikes and e-scooters is making its way through Congress. While these are positive steps, enforcement and awareness remain uneven, leaving significant gaps in consumer protection and risk mitigation.
From our perspective at ULSE, a multi-pronged strategy is essential:
Better enforcement of safety standards for batteries and chargers.
More robust public education on safe charging practices.
Trade-in and swap programs that encourage delivery workers to discard unsafe batteries.
Underwriting models that consider device certification, consumer behavior, and building type.
Improved incident reporting frameworks that enable cities and insurers to collect better data and therefore better track risk exposure.
With better data, smarter standards, and more coordinated public-private action, the future of e-mobility will thrive with safety at its center.
Mr. Deb will be among the risk and insurance industry thought leaders speaking at Triple-I’s Joint Industry Forum (JIF) in Chicago on June 18, 2025. It’s not too late to register to attend this insight-driven event.
As high-severity natural catastrophes – wildfires, floods, hurricanes, and others – become more frequent and more people move into riskier locales, insurance affordability and availability have become a challenge in many states.
Insurers underwrite and price coverage based on the risks they’re assuming, and rising premiums in these states have pushed more homeowners into residual market mechanisms, such as state-backed insurance pools or agencies. Reliance on these funds – which often provide more limited coverage at higher costs – is not sustainable in the long term.
To ensure market stability and continued insurance availability and affordability, insurers must leverage more granular and dynamic risk models that account for real-time environmental conditions, mitigation measures, and property-specific characteristics. A new paper by Triple-I and Guidewire – a provider of software solutions to the insurance industry – uses case studies from three California areas with very different geographic and demographic characteristics to show how such tools can be used to identify properties with attractive risk properties, despite their location in wildfire-prone areas.
California’s risk profile
In addition to its particular risk characteristics, California’s insurance challenge is exacerbated by a 1988 measure – Proposition 103 – that has constrained insurers’ ability to profitably insure property in the state. In a dynamically evolving risk environment that includes earthquakes, drought, wildfire, landslides, and damaging floods, regulatory interpretation of Proposition 103 has made it hard for some insurers to offer coverage in the state.
In some cases, this has led to insurers limiting or reducing their business in the state. With fewer private insurance options available, more Californians are resorting to the state’s FAIR Plan, which offers less coverage for a higher premium. For many, this “insurer of last resort” has become the insurer of first resort. This isn’t a tenable situation for the state or its policyholders. California’s insurance availability/affordability challenges will require a multi-pronged approach, and underlying every component is the need for granular, high-quality, reliable data.
Modeling based on granular data
Guidewire’s analysis, based on its HazardHub Wildfire Score, has shown that wildfire mitigation and home hardening can reduce wildfire damage by as much as 70 percent. But identifying less risky lots in such areas is no easy task.
“Every property being assessed for wildfire risk is unique,” the report says. “Therefore, it’s important to subject as many relevant variables as possible to analysis. For example, proximity of structures to fuel is important – but, to be more predictive, it helps to know more: What kind of fuel? Is there potential for a wind-driven event? Is the property on a hill? If so, is it north-facing?”
Guidewire’s model includes standard variables, such as slope, aspect, wildfire history, wind, and the amount of nearby vegetation. It also includes differentiators like vegetation type and fire-suppression success rate.
“The traditional approach to wildfire risk assessment has left many Californians without access to affordable property insurance coverage,” said Triple-I Chief Insurance Officer Dale Porfilio. “Our research shows that with more detailed, property-level analysis, insurers can confidently offer coverage in areas previously deemed too risky.”
Important moves by California
California has taken steps to address regulatory obstacles to fair, actuarially sound insurance underwriting and pricing – most notably, the state’s Sustainable Insurance Strategy, an ambitious plan released by Insurance Commissioner Ricardo Lara in 2023 plan aimed at safeguarding the health of the insurance market while ensuring long-term sustainability. A key component of the plan is a requirement that insurers writing homeowners coverage in the state write no less than 85 percent of their statewide market share in areas identified by the commissioner as “under-marketed.”
Tightly focused, data-driven analysis using tools like the HazardHub Wildfire Score, can go a long way toward helping insurers meet those requirements by identifying less risky parcels in undermarketed areas.
“The Triple-I analysis highlights how next-generation tools and data can uncover lower-risk properties – even in high-risk areas – empowering insurers to expand coverage confidently and responsibly,” said Leo Tenenblat, Senior Vice President and General Manager, Data and Analytics at Guidewire.
The Institutes’ Pete Miller and Francis Bouchard of Marsh McLennan discuss how AI is transforming property/casualty insurance as the industry attacks theclimate crisis.
“Climate” is not a popular word in Washington, D.C., today, so it would take a certain audacity to hold an event whose title prominently includes it in the heart of the U.S. Capitol.
For two days, expert panels at the Ronald Reagan Building and International Trade Center discussed climate-related risks – from flood, wind, and wildfire to extreme heat and cold – and the role of technology in mitigating and building resilience against them. Given the human and financial costs associated with climate risks, it was appropriate to see the property/casualty insurance industry strongly represented.
Peter Miller, CEO of The Institutes, was on hand to talk about the transformative power of AI for insurers, and Triple-I President and CEO Sean Kevelighan discussed – among other things – the collaborative work his organization and its insurance industry members are doing in partnership with governments, non-profits, and others to promote investment in climate resilience. Triple-I is an affiliate of the Institutes.
Sean Kevelighan of Triple-I and Denise Garth, Majesco’s chief strategy officer, discuss how to ensure equitable coverage against climate events.
You can get an idea of the scope and depth of these panels by looking at the agenda, which included titles like:
Building Climate-Resilient Futures: Innovations in Insurance, Finance, and Real Estate;
Fire, Flood, and Wind: Harnessing the Power of Advanced Data-Driven Technology for Climate Resilience;
The Role of Technology and Innovation to Advance Climate Resilience Across our Cities, States and Communities;
Pioneers of Parametric: Navigating Risks with Parametric Insurance Innovations;
Climate in the Crosshairs: How Reinsurers and Investors are Redefining Risk; and
Safeguarding Tomorrow: The Regulator’s Role in Climate Resilience.
As expected, the panels and “fireside chats” went deep into the role of technology; but the importance of partnership, collaboration, and investment across stakeholder groups was a dominant theme for all participants. Coming as the Trump Administration takes such steps as eliminating FEMA’s Building Resilient Infrastructure and Communities (BRIC) program; slashing budgets of federal entities like the National Oceanographic and Atmospheric Administration (NOAA) and the National Weather Service (NWS); and revoking FEMA funding for communities still recovering from last year’s devastation from Hurricane Helene, these discussions were, to say the least, timely.
Helge Joergensen, co-founder and CEO of 7Analytics, talks about using granular data to assess and address flood risk.
In addition to the panels, the event featured a series of “Shark Tank”-style presentations by Insurtechs that got to pitch their products and services to the audience of approximately 500 attendees. A Triple-I member – Norway-based 7Analytics, a provider of granular flood and landslide data – won the competition.
Earth Day 2025 is a good time to recognize organizations that are working hard and investing in climate-risk mitigation and resilience – and to recommit to these efforts for the coming years. What better place to do so than walking distance from both the White House and the Capitol?
Personal cyber risk – historically viewed as synonymous with “identity theft” – has evolved with the rise of internet-connected devices in the home. These devices can open the door to malware that can seize control of a homeowner’s data and expose them to extortion and other threats. Phishing and financial scams have been found to generate the greatest losses for homeowners.
Insurance for these perils exists, but adoption has not grown in line with the increasing peril. Triple-I and Hartford Steam Boiler (HSB) recently conducted research to better understand why and what insurers can do about it. The survey found that personal cyber insurance – while presenting a sales opportunity – involves educational challenges for agents and consumers.
Triple-I surveyed retail agents of homeowners insurance, since personal cyber coverage is commonly sold as an endorsement to homeowners’ policies. These agents are very knowledgeable of homeowners’ risks that can result in physical damage to property, as well as theft and liability coverages.
“Agents see the storm,” said Neil Rekhi, product manager for personal cyber insurance at HSB, “but homeowners can’t envision the damage until it’s too late.”
While 84 percent of agents surveyed said they recognize the value of personal cyber insurance, the survey found a notable gap between agents who feel comfortable selling it and those who don’t.
This hesitation is mirrored by consumer skepticism. The study found that 56 percent of agents report their customers either don’t understand or don’t agree with the value proposition of personal cyber insurance products.
“There’s a significant disconnect between agent perceptions of customer needs and actual customer perceptions of product value,” noted Dale Porfilio, Chief Insurance Officer at Triple-I.
Sales efforts remain robust, with 77 percent of agents having presented personal cyber insurance options to homeowners in the past month. However, consumer adoption rates continue to lag, highlighting a fundamental communication breakdown.
Closing the personal cyber protection gap will require a three-pronged approach: consumer education, agent/broker training, and a data-driven approach to product development,” says Triple-I CEO Sean Kevelighan.
Garnering millions of weekly users and over a billion user messages every day, the generative AI chatbot ChatGPT became one of the fastest-growing consumer applications of all time, helping to lead the charge in AI’s transformation of business operations across various industries worldwide. With generative AI’s rise, however, came a host of accuracy, security, and ethical concerns, presenting new risks that many organizations may be ill-equipped to address.
Enter Insure AI, a joint collaboration between Munich Re and Hartford Steam Boiler (HSB) that structured its first insurance product for AI performance errors in 2018. Initially covering only model developers, coverage expanded to include the potential losses from using AI models, as – though organizations might have substantial oversight in place – mistakes are inevitable.
“Even the best AI governance process cannot avoid AI risk,” said Michael Berger, head of Insure AI, in a recent Executive Exchange interview with Triple-I CEO Sean Kevelighan. “Insurance is really needed to cover this residual risk, which…can further the adoption of trustworthy, powerful, and reliable AI models.”
Speaking about his team’s experiences, Berger explained that most claims stem not from “negligence,” but from “data science-related risks, statistical risks, and random fluctuation risks, which led to an AI model making more errors than expected” – particularly in situations where “the AI model sees more difficult transactions compared to what it saw in its training and testing data.”
Such errors can underlie every AI model and are thereby the most fundamental to insure, but Insure AI is currently working with clients to develop coverage for discrimination and copyright infringement risks as well, Berger said.
Berger also discussed the insurance industry’s extensive history of disseminating technological advancements, from helping to usher in the Industrial Revolution with steam-engine insurance to insuring renewable energy projects to facilitate sustainability today. Like other tech innovations, AI is creating risks that insurers are uniquely positioned to assess and mitigate.
“This is an industry that’s been based on using data and modeling data for a very long time,” Kevelighan agreed. “At the same time, this industry is extraordinarily regulated, and the regulatory community may not be as up to speed with how insurers are using AI as they need to be.”
Though they do not currently exist in the United States on a federal level, AI regulations have already been introduced in some states, following a comprehensive AI Act enacted last year in Europe. With more legislation on the horizon, insurers must help guide these conversations to ensure that AI regulations suit the complex needs of insurance – a position Triple-I advocated for in a report with SAS, a global leader in data and AI.
“We need to make sure that we’re cultivating more literacy around [AI] for our companies and our professionals and educating our workers in terms of what benefits AI can bring,” Kevelighan said, noting that more transparent discussion around AI is crucial to “getting the regulatory and the customer communities more comfortable with how we’re using it.”
Global insurtech funding hit a seven-year low of $4.25 billion in 2024, marking a challenging year for the sector, though AI-focused companies showed resilience by securing $2.01 billion across 119 deals, according to Gallagher Re’s Global Insurtech Report.
Total insurtech funding in 2024 — down 5.6 percent from $4.51 billion in 2023 — represents the lowest funding level since 2018, signaling a more cautious investment climate. Last year’s insurtech deal count saw a more pronounced decline, falling 18.5 percent to 344 deals from 422 in the previous year — a low not seen since 2019. Reflecting this trend, the number of venture investors in the space decreased to 466 from 574, indicating a more selective approach to insurtech investments.
Segment Performance
A closer look at the market segments reveals divergent trajectories, Gallagher Re found. Property/Casualty (P/C) insurtech funding experienced a significant downturn, decreasing 24.3 percent to $2.59 billion in 2024 from $3.42 billion a year earlier. In contrast, Life/Health insurtech funding bucked the overall trend, surging by 53.6 percent to reach $1.66 billion.
Despite an overall funding contraction, several positive indicators emerged, suggesting underlying strength in the market, the report noted.
Early-stage funding grew by 8.8 percent to $1.22 billion, highlighting continued investor confidence in nascent insurtech innovations. Moreover, the average deal size increased by 14.6 percent to $14.67 million, indicating that while fewer deals were made, those that did close were of higher value.
Lastly, mega-round funding — deals of $100 million or more — remained relatively stable at $930.17 million, down only slightly from $969.00 million in 2023.
Geographic Shifts and Market Leadership
The United States continues to be the powerhouse of insurtech innovation, accounting for 50.58 percent of all insurtech deals worldwide in 2024.
The United Kingdom saw a significant increase in its deal share, rising to 9.30 percent in 2024 from 7.35 percent in the previous year. This growth of nearly two percentage points represents the largest gain among all countries. Moreover, the U.K. has consistently maintained its status as the nation with the second-largest share of global insurtech deals since 2017.
While established markets continue to lead, several emerging players are making their mark on the insurtech landscape. Canada and Germany both demonstrated growth, each experiencing a 1.78 percentage point increase to claim a 3.20 percent share of global deals. South Korea is another country to watch, with its deal share increasing by 1.21 percentage points to reach 1.45 percent.
AI-centered Insurtech Performance
Artificial Intelligence continues to make waves in the insurtech industry, accounting for a significant portion of deals and funding in 2024. AI-focused firms represented 34.6 percent of all insurtech deals throughout the year, raising $2.01 billion across 119 deals. The financial prowess of AI-centered insurtechs is further highlighted by their higher average deal sizes, which stood at $18.93 million compared to $12.21 million for their non-AI counterparts.
The fourth quarter of 2024 saw a particularly strong performance for AI in the insurtech space. AI-centered companies accounted for 42.3 percent of all deals during this period, showcasing the growing confidence in AI-driven solutions. Moreover, these AI-enabled insurtechs managed to raise an additional $5 million on average compared to their non-AI counterparts, further cementing the technology’s value proposition in the industry.
While the numbers paint a promising picture, Gallagher Re emphasized the need for practical applications of AI in insurance.
“Much like insurtech more broadly, AI must be part of a use case that is commercially sound and supports a broader set of business objectives,” the report stated. “Using AI to assist underwriters to make better risk selection decisions is one such clear use case, for example. Using AI to send customers down company rabbit holes where call centers once existed is not.”
Maintaining human centricity in an increasingly digitized world was a focus of discussion for many participants at Triple-I’s 2024 Joint Industry Forum (JIF) – particularly during the “Fireside Chat,” featuring Katherine Horowitz, executive vice president and head of business units for The Institutes, and Casey Kempton, president of personal lines at Nationwide.
As generative AI and other technological innovations help streamline the insurance value chain, such processes must continue to align with the human needs intrinsic to insurance, Kempton stressed.
“Insurance is a human business,” Kempton said. “The moment of a claim – of whatever tragedy or inconvenience that has happened – is a human moment. Theres’s emotion involved in that. I don’t expect any robot or machine to take on that experience end-to-end and be able to deliver what folks need in that moment, which is comfort and assurance.”
Rather, new technology presents opportunities to facilitate more proactive and individualized risk management than ever before, while also enabling employees to do what this industry does best: engaging with other people.
Role of telematics
Usage-based insurance, for instance, allows insurers to tailor auto rates based on the policyholder’s driving behavior, tracked by telematics. By providing feedback to encourage safer driving habits, telematics has been found to lower risk and reduce auto premiums, empowering consumers to recognize their direct influence on their insurance rates, Kempton said.
Similarly, advanced smart devices – such as those developed by Whisker Labs (Ting) and Ondo InsurTech (LeakBot) – continuously detect conditions that could lead to damage within a home and notify homeowners before losses occur. The success of these devices has spurred numerous insurance carriers, including Nationwide, to pay for and distribute them to customers.
“Supporting the delivery of these technologies to our customers is critical,” Kempton explained, as is “making the cost of entry accessible.”
Words matter
Kempton noted that mitigative insurance solutions further serve to alleviate widespread public distrust in the industry, which has become “sullied” under misconceptions of insurance as merely a commodity.
Industry language fixated on costs, rather than consumer needs, is partly to blame.
“In insurance, we talk about ‘mitigating loss,’” Kempton said. “That’s how it feels from our perspective – we see claims as losses – but let’s turn that into, ‘how can [insurers] better engender peace of mind and protection for consumers?’”
Louisiana Insurance Commissioner Tim Temple later echoed this sentiment during a panel on legal system abuse, discussing how “billboard attorney” advertising has appropriated the consumer confidence once placed in insurance carriers.
“I remember when insurance companies advertised dependability and stability,” Temple explained. “Now it’s lizards, birds, and jingles… And then you see the attorneys, and they talk about how you’re going to be safe and secure with their service. That’s [the insurance company’s] job.”
Fueled by such advertising, excessive claims-related litigation has cost residents of Louisiana and other states across the country thousands of dollars in “tort taxes” every year, contributing to rising premium rates as insurers struggle to predict and mitigate protracted claims disputes. Lack of transparency around third-party litigation funding (TPLF), in which investors fund lawsuits in exchange for a percentage of any settlement, exacerbates this financial strain.
“If we can avoid these additional expenses and the severity attached to nuclear verdicts, it benefits all consumers,” Kempton said. Recent reforms in Florida – once the poster child for legal system abuse – indicate as much.
But reform necessarily hinges on collaboration between all stakeholders, which is unattainable without resolving “the consumer mindset we’ve inadvertently created around what the value of insurance is,” Kempton said. Updated legal regulations are equally important to ending legal system abuse as reasserting the key values of insurers – to protect and care for policyholders.
When I first wrote here about insurance coverage related to cryptocurrency theft, I discussed whether these digital assets were securities (as suggested by the SEC) or property (as suggested by the IRS) and how that might impact insurance coverage under a typical homeowners policy.
I also discussed whether the full policy limits for generic property were available for the theft of the assets or a policy sublimit for money would apply.
At that time, courts had provided little guidance on the issue, and few situations were analogous. In recent years, however, guidance has emerged, including from a line of cases that would not appear to have much relevance at first glance.
Wrestling over “physical” loss
Nearly every appellate court in the country has wrestled with the issue of whether economic losses experienced by businesses as a result of the COVID-19 pandemic were covered by their commercial property insurance policies. A commercial property policy typically covers the “physical” loss of or damages to property. Insurers uniformly denied those business interruption claims and thousands of businesses sued. Courts consistently rejected the businesses’ claims for coverage because the COVID-19 virus does not change the structure of the insured property, and purely economic losses are not “physical” loss or damage.
Similar to the commercial property insurance policies at issue in the COVID-19 claims, a typical homeowners policy covers the direct physical loss of covered personal property.
In 2021, Ali Sedaghatpour had approximately $170,000 of his cryptocurrency stolen and made a claim under his homeowners insurance policy. The insurer paid him the $500 limit for the theft of electronic funds, but denied coverage for the remainder of the loss. The homeowner sued and the federal district court for the East District of Virginia ruled in favor of the insurer. Recently, the United States Court of Appeals for the Fourth Circuit affirmed the decision in favor of the insurer. The case was titled Sedaghatpour v. Lemonade Insurance Co. (Case No. 23-1237).
The court ruled that the digital theft of the homeowners’ currency did not amount to direct “physical” loss and the insurer owed the homeowner nothing more than the $500 it had already paid. The appellate court did not disturb other findings by the trial court – including the lower court’s citation to dictionary definitions of cryptocurrency, which state that cryptocurrency exists “wholly virtually”
Looking ahead
In the Sedaghatpour case, the courts were applying Virginia law; however, given the uniform development of “physical loss” throughout the country in the COVID-19 context, I expect other courts around the country will come to the same conclusion when the issue of how to treat digital assets comes before them. I likewise observe that some insurers have revised their policy language to state expressly that the loss of “electronic currency” is not covered.
These recent court cases confirm that individuals owning cryptocurrency should take extra care to protect their digital assets and should not rely on standard language in homeowners insurance policies to hedge against theft.
Michael Menapace is a Triple-I Non-Resident Scholar, Co-chair of the Insurance Practice Group at Wiggin and Dana LLP, a professor of Insurance Law at the Quinnipiac University School of Law, and a Fellow of the American College of Coverage Counsel.
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.
