As climate change intensifies both frequency and severity of catastrophic (CAT) events, such as hurricanes, floods, and wildfires, homeowners face proportional increased property risk. Taking proactive measures to ensure resiliency not only protects homeowner property and contributes to broader efforts reducing losses in the insurance industry, but can also lead to lower insurance rates.
In 2023 alone, the US experienced 25 CAT events resulting in a total of $73.8 billion.
What is the industry doing?
Insurance companies are implementing operational strategies that involve leveraging weather data throughout the business, from risk assessment to portfolio management as is described in more detail in an article by IBM’s Dan Mishra.
Mishra presents that by engaging customers with climate intelligence, new opportunities are created for carriers to attract and retain insureds while reducing financial risk. For example, carriers can alert insureds to property threats and offer mitigation advice while parametric insurance provides swift payments without damage assessment.
What can homeowners do?
Here are some key tips for homeowners to proactively consider and implement to enhance property resiliency:
1. Evaluate Your Home's Vulnerabilities
Start by understanding the specific risks associated with your geographic location. Whether it's flooding, wildfires, or storms, identifying these risks can help you prioritize the most effective resilience measures for your home. Consider a professional assessment to pinpoint vulnerabilities in your home's structure and systems.
2. Reinforce Structural Integrity
Strengthen your home’s defenses against CAT events by upgrading critical components such as:
Roofing: Use impact-resistant materials and secure attachments to withstand high winds and debris.
Windows and Doors: Install storm shutters and use impact-resistant glass to protect against breakage.
Garage Doors: Reinforce or replace with wind-resistant models to prevent them from being a weak point during storms.
3. Enhance Water Management Systems
Improve drainage systems to handle heavy rainfall and prevent water from entering your home. Regularly clean gutters and consider installing additional measures such as French drains or sump pumps. In flood-prone areas, raising your home’s foundation and utilities (like electrical systems) above expected flood levels can significantly reduce the risk of water damage.
4. Adopt Fire-Resistant Landscaping
In areas susceptible to wildfires, use fire-resistant plants and materials around your home. Create defensible space by removing flammable vegetation and materials that could spread fire. Employing fire-resistant construction materials for decks, siding, and roofs can also dramatically increase your home’s survival during a wildfire.
5. Implement Regular Maintenance Checks
Routine inspections and maintenance can prevent minor issues from becoming major vulnerabilities during a CAT event. Check for and repair roof
Ultimately, with accelerated advancements in accurate weather insights, better data exchange platforms, and increased interaction between carriers and their insureds, not only can losses be mitigated for all; the creation of new business opportunities and a more balanced overall market will emerge.
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