Climate change is a complex phenomenon driven by the accumulation of greenhouse gases in the atmosphere, primarily stemming from human activities such as burning fossil fuels and deforestation. This warming of the planet is causing significant changes in weather patterns, leading to more severe weather events. In other words, extreme weather events are becoming more extreme.
These changes are not limited to regions traditionally impacted by dangerous weather events. In fact, the risk of weather-related damages is rising across the country and, therefore, impacting property-loss insurance policies. For example, coastal areas are experiencing more severe hurricanes, storm surges, and rising sea levels that can cause flooding and property erosion, while inland regions are facing more intense heatwaves, droughts, and wildfires.
Here are a couple things to consider:
Let’s look at a few facts:
- Out of the 15 warmest years on record, only one year is from the last century – 1998 (Super El Niño year)
- 10 of the 10 warmest years all have occurred in the last 10 years (2015 – 2023)
- 2023 was the warmest year on record
[Source: Climate Change & Insurance – Risk, Preparation, & Mitigation presentation, Property & Liability Resource Bureau]
Coastal locales are a prime example: According to the National Oceanic and Atmospheric Administration’s National Marine Ecosystem Status Website, coastal counties make up less than 10 percent of the total land area in the U.S. (not including Alaska), but account for 39 percent of the total population. And the populations in those counties is expected to increase. So, as populations grow in areas where the risk of severe weather events is high, this means the number of claims may increase in those areas.
Insurers are collaborating with government agencies, research institutions, and other stakeholders to better understand the risk factors associated with climate change in different geographic areas. This can involve looking at a number of factors, such as population-movement trends, changes in the behavior of high-intensity weather events, and the monetary impact of severe-weather-event damages.
Insurers also support public measures that are designed to make populated areas more resilient against severe weather events. This support may involve:
To mitigate the risks associated with climate-induced disasters, the insurance industry has begun to ingrain those risks into decision-making. As a result, insurers are adopting new approaches in risk assessment and management. For example:
Look for news stories and articles you can read to learn more about these topics.
1. Larger Workloads – As the number of extreme-weather-related claims increases, claims adjusters are facing mounting pressure to settle more claims than ever before. (For example, the number of available licensed field adjusters after a hurricane is often significantly lower than the number needed.)
2. Demanding Assignments – You may encounter new challenges in assessing and quantifying damages caused by extreme weather events, particularly in cases where the impacts are unprecedented or involve complex interactions between multiple hazards (e.g., a hurricane followed by flooding and landslides).
One way to effectively navigate these two challenges is to adopt new tools – particularly ones that will help you adapt to the changing landscape of insurance adjusting.
To handle the anticipated increase in claim volumes and complexities, look into leveraging advanced technologies in your insurance claims processing workflows. Here are four examples of innovative claims strategies you can use:
When used for the purpose of claims process automation, AI can help you increase your productivity. It does this by automating various tasks, such as fraud detection, freeing you up to focus on more complex aspects of the claims process.
Learn more: AI for Claims Adjusters: Boosting Efficiency with 10 Key Examples
Drones are becoming invaluable tools for rapid assessment and processing of loss claims. Drones can quickly capture high-resolution imagery and data from hard-to-reach or hazardous areas, providing a comprehensive view of the damage without you having to put yourself at risk.
Remote-sensing satellites can be allies by providing real-time disaster monitoring. This is especially helpful in disaster areas, such as flooded neighborhoods, that make it difficult for you to get a quick and accurate picture of losses.
For home-insurance and commercial-property-insurance claims specifically, a floor plan app (a type of insurance claims software) can be an ideal tool for streamlining the documentation process. By allowing you to capture detailed room dimensions and property features quickly and accurately, a floor plan app can significantly speed up the documentation process.
Look for an app that is loaded with a variety of helpful features. For example, the magicplan app:
As the impacts of climate change intensify, the insurance industry must adapt to the increasing quantity and severity of weather-related claims. Claims adjusters like you play a critical role in this adaptation process, serving as the frontline in assessing and settling these claims. By understanding the science and impacts of climate change, staying up to date with industry risk assessments and mitigation efforts, navigating key challenges, and embracing advanced property adjuster tools, you can position yourself to handle claims efficiently and effectively in the face of more extreme weather events.
RELATED READING:
Understanding the Property Claims Services (PCS) Index: A Guide for Adjusters in Times of Disasters