Report

Closing the Climate Protection Gap: Strategic Imperatives for Insurance in a High-Risk Era

Insurance companies face a climate protection gap crisis as billion-dollar weather disasters surge and underinsurance reaches 75% of commercial properties.
/

The insurance industry stands at a critical crossroads as climate-related risks escalate dramatically, with annual billion-dollar weather disasters jumping from nine events (1980 to 2024 average) to 27 events in 2024 alone. Property repair and replacement costs have surged 55% from 2020 to 2022, while up to 75% of commercial properties and two-thirds of homes remain dangerously underinsured. This perfect storm has left insurers losing money on homeowners coverage in 18 states in 2023, compared to just eight states in 2013. 

Our research identifies four strategic approaches insurance companies must consider to survive this climate crossroads: investing in AI-powered technology for enhanced risk assessment and pricing, exploring competitive product differentiation opportunities, establishing coverage syndicates and reinsurance partnerships for climate-related risks, or supporting parametric insurance solutions. Success requires modernizing legacy systems, implementing real-time climate data processing, and balancing precise risk assessment with regulatory compliance across 50 state requirements while maintaining customer trust and market share.

About the Author

Chris Eberly

Chris Eberly

Chris Eberly is the Head of Insurance Insights, with expertise in IT leadership, transformational technology implementation, enterprise information/data management, and technology strategy for the insurance industry. Prior to joining Datos Insights, Chris was VP and head of Life & Producer Services IT at Lincoln Financial, where he led the Implementation of FAST as the strategic life policy administration platform, significantly...

Read More

Other Authors

Mitch Wein

Mitch Wein

Mitch Wein is an Executive Principal in the Insurance Practice at Datos Insights. He has expertise in international IT leadership and transformation as well as technology strategy for banking, insurance (life, annuities, personal, commercial, specialty), and wealth management. Prior to joining Datos Insights, Mitch served in senior technology management positions at numerous financial institutions. At Bankers Trust (now Deutsche Bank), he automated...

Read More
Meredith Barnes-Cook

Meredith Barnes-Cook

Meredith is an award-winning insurance go-to-market and transformation strategist with almost four decades of experience in insurance operations and technology. She brings a unique blend of industry knowledge, digital expertise, change management, and entrepreneurial spirit to help clients navigate the ever-evolving insurance industry landscape. Meredith offers a differentiating combination of extensive experience in the global insurance industry, expertise in insurance...

Read More

Related Content

Get Summary Report

"*" indicates required fields

This field is for validation purposes and should be left unchanged.
Name*