Cruel Summer: Brace Yourself – and Your Property – as Experts Predict a Vortex of Volatile Weather

The climate-driven weather whirlwind shows no signs of abating, making it more challenging to both predict meteorological events and insure against them.

As many as 33 named storms could slam into coastal U.S. this year, with five projected hurricanes to be Category 3 or greater,¹ shattering the all-time record of 30 named storms in 2020.² But it doesn’t end with hurricanes.

For other weather events, patterns are also rapidly changing. Nearly 400 tornadoes hit the U.S. in April — about twice the long-term average for that month.³ Triple-digit temperatures throughout the contiguous U.S. will likely continue for the second consecutive summer, bringing scorching drought conditions in the Southwest.

And 2024 could potentially see record-breaking precipitation and flooding in the Pacific Northwest again. Coupled with rising sea levels, all-time-high ocean temperatures and a shift from the calming effect of El Niño to the brash, wind-driven La Niña expected this month, the 2024 storm season could be disastrous.

Escalating claims and losses cause carriers to retreat

With devastating storms come unprecedented claims and losses from wind, floods and wildfires, causing carriers to retreat in many regions of both U.S. and Canada. Insurers continue to raise rates and underwriters are sharply increasing their scrutiny of potential exposures, leaving businesses and homeowners to shoulder more risk.

Elevated inflation and construction costs have increased the challenges for property owners who may have significantly undervalued their properties as a result of this economic environment and now face costlier premiums for reduced coverage. And surge pricing for lumber, roofing materials and hardware in post-disaster locales exacerbates the problem.

Climate change-induced weather events such as wind will likely lead to significant shifts in the insurance rate environment this summer. That’s why it is essential to work with a broker who has the analytic capabilities necessary to identify and mitigate the most pressing risks. You also need a broker with the carrier relationships to not only find you the insurance coverage you need but also the foresight to get ahead of these potential challenges long before a catastrophic storm makes landfall.

The HUB EDGE

It may seem like a no-win situation, but there are things businesses and homeowners can do to manage increasing property risks. It starts with two key elements: proper exposure valuation and risk mitigation. And you must have both.

This is where working with a strong broker pays off, as you can rely on a team of insurance professionals to make recommendations based on your overall risk profile.

To improve your insurability and enhance your resiliency, property owners should:

• Assess property risk. Engage an expert to thoroughly assess your property risk and use modeling to evaluate your exposures. While mitigating some risks such as hurricanes, wind, wildfires and floods may require investments in roof replacements, landscaping or hardscaping and property regrading, other measures include installing inexpensive water sensors or automatic shutoff valves, elevating electrical equipment from vulnerable areas and adding shutters. One California client installed fire-resistant landscaping and engaged with a wildfire defense services company, which not only helped the business obtain sufficient property insurance coverage, but also helped them survive a wildfire that burned down several nearby businesses.

• Take inventory of your policies — and decide whether you need everything in them. Once you’ve determined the level of insurance needed to cover current replacement costs, look at everything your property policy actually covers and prioritize coverage. Working with a broker who has access to the right analytical tools can help you tailor your insurance program to meet your actual needs. Would you rather lower your limit and shoulder the risk for contents inside the property? Are you carrying more property insurance than needed instead of flood coverage? Evaluating all aspects of your home and business — and taking a critical eye to exposures — will help your broker find the right coverages to protect your property.

• When investing in property, prioritize risk management before signing on the dotted line. What is the best way to protect against exposures? Analyze potential risks before constructing a new building or buying a new property. Questions may include the age of the property and the roof, whether it’s situated in or near a catastrophe zone, the price and availability of property insurance and the claims history on the property or structures. Learning the answers to these important questions can help you mitigate issues, make changes prior to construction or avoid a potentially unwise purchase. A HUB client that was building a warehouse near a floodplain conducted a risk assessment and realized that if they spent an additional $2 million in construction costs to raise the building a few feet off the ground, they would save on property insurance premiums and potentially avoid multi-million-dollar losses from floods. Likewise, adding a nonflammable barrier zone to a wildfire-exposed building can help slow down or even stop a wildfire from engulfing your property.

More in-depth analysis of how climate change impacts insurance rates and coverage is coming soon in HUB’s Mid-Year Outlook with practical guidance on ways to help you protect what matters most.

¹ PropertyCasualty360, “Weather science, risk modeling and the 2024 hurricane season,” April 22, 2024.
² The Washington Post, “Forecast group predicts busiest hurricane season on record with 33 storms,” April 24, 2024.
³ USA Today, “US tornado activity ramps up: Hundreds of twisters reported in April, May, “May 8, 2024.