Surprising stats about climate insurance
Climate change is significantly impacting the insurance industry, leading to various surprising statistics that highlight its effects on the sector. According to the Insurance Information Institute (III), the number of natural disasters has increased dramatically over the past few decades. From 1980 to 2020, the average number of annual weather and climate-related disaster events nearly tripled globally. This has not only led to increased costs for municipalities and underwriters, but increased premiums for homeowners that are having a devastating impact on the wellbeing of individuals in the wildland-urban interface (WUI).
We’ve collected some notable statistics and aim to elaborate on what they mean for the future and their relative studies, starting with number one.
The III released a paper entitled “Perception of Weather Risk” that outlined many of the startling facts about our changing climate. According to the study, 32% of individuals in the US have already been impacted by a disaster in the last decade, on par with the ⅓ of homes in the natural disaster zoning set forth by FEMA. 59% of homeowners believe they will be impacted by a natural disaster in the next decade, but many are willing to take steps to reduce their risk.
63% of homeowners in high risk zones are willing to spend at least $5k to protect their property according to III, with 50% of individuals on average already taking steps in making their property more resilient. But that still leaves over 30 million homeowners without protection and needing more incentives to help reduce their risk.
But not to worry! New evidence shown by Moody’s has been shown to significantly reduce the impact of disasters on homes that follow certain building codes and regulations, showcasing the importance of defensible space and prevention measures on survivability.
“A recent case study by Moody’s reveals that in locations like South Florida, meeting or surpassing evolving building codes can slash home damage costs almost tenfold,” says Kenneth Araullo of Insurance Business Magazine, highlighting the severity of east-coast disasters like floods and hurricanes and how to safeguard the coasts.
In many cases, these prevention measures can improve the ability of a home to withstand a disaster by anywhere from six to ten-fold from wind-related events to water and fire.
These statistics underscore the profound impact of climate change on the insurance industry, emphasizing the need for proactive measures, adaptation strategies, and collaborative efforts among governments, insurers, and communities to address and manage these risks effectively.
