How insurance must adapt to catastrophic weather trends

Politics aside, this year has confirmed an important and complex fact: Our climate is changing.

On the Gulf Coast, we have seen a record number of named storms requiring forecasters to revisit the Greek alphabet for more names. An average season produces 12 named storms, including six hurricanes. This year we have observed 30 named storms, with 13 hurricanes, six classified as major. In contrast, the 2019 season saw 18 named storms.

Related: Blown away: 2020 hurricane season at a glance

We’re seeing fire season across the West and in California starting earlier and ending later each year. The length of fire season is estimated to have increased by 75 days across the Sierras. Moreover, from Jan. 1 to July 13 of this year, there were 27,423 wildfires compared with 22,327 wildfires in the same period in 2019.

Changes in climate are considered a key driver in both of these trends.

Major destruction, steep price tag

Beyond the heart-wrenching impact of these incidents, changes in climate are affecting insurance considerations and costs for policyholders. As severe weather increases, thoughtfully and confidently navigating its frequency, severity and damage is critical in assuring the right insurance protection for every policyholder.

Unfortunately, there is no easy fix, public initiative or government policy that will quickly reverse the rising number of catastrophic weather events. Stakeholders need to take steps at a global level to solve the issue. And the insurance industry needs to take mitigating steps to support policyholders.

See also: How insurance is being called to lead in the climate crisis

What you can do

Here are four things we, as industry leaders, can embrace right now:

Update modeling: The unpredictable nature of climate change leaves historical weather records inaccurate. Carriers and actuaries need to engage climate change scientists to improve how policies are written and priced. With better predictive data identified, carriers can stress test their organization in anticipation of catastrophic weather scenarios to understand how it will affect their business.

Create innovative risk mitigation initiatives. Climate change has macro implications but very personal consequences as well. Businesses, houses of worship and homes have been destroyed by fires in Oregon and hurricanes in Louisiana. Insurance companies can assist property owners with risk mitigating practices or initiatives, which could help control the cost of premiums. For instance, Church Mutual has a new, voluntary program, CM Wildfire Solutions, which provides fire mitigation services in the case of an approaching wildfire. We need these programs to ensure safety of life and property for policyholders.

Partner with construction, building supply and architecture companies. We’re seeing the evolution and improvement of construction technologies and building design. These improvements need to be analyzed and applied widely to new construction in catastrophic weather hot zones. Similarly, novel materials that can be used to retrofit buildings will help buildings better withstand the effects of climate change.

Green building initiatives. As insurers, we need to be part of the solution in fighting climate change. When claims from catastrophic weather inevitably come, the rebuilding efforts should include climate change-resistant design, but also green building practices. Incorporating aspects set forth by LEED and other green building organizations will help our communities preserve our natural resources and environmental health.

Insurance companies have looked at climate change as an issue for years. The industry has produced countless studies warning us of its potential impact. However, we have yet to truly embrace the challenge. Now is the time to act. With innovative technologies, prevention methods and a commitment to keeping policyholders safe — and covered — we can better address the reality that’s here to stay.

Based in Merrill, Wisconsin, Rich Poirier is president and CEO of Church Mutual Insurance Company, S.I. For more information, send an email to corporatecommunications@churchmutual.com.

Also by this contributor: A wildfire wake-up call for all of us