Zurich Insurance, Swiss Re, U.S. officials talk climate risk in D.C.

Days after reports emerged that Hurricanes Helene and Milton could cost insurers more than $35 billion¹ while impacting job growth,² leaders from Zurich Insurance, Swiss Re and the federal government’s Treasury Department gathered in Washington, D.C., for a conversation about how to shore up resilience and sustainability in the face of rising climate risks.

A resounding theme of the panel discussion, called “Building resilient economic growth: Aligning climate risk policy and insurance solutions,” was that neither private industry nor public entities can do it alone. But progress can be made by bringing the (re)insurance industry’s risk knowledge, data and experience into policy conversations and educational efforts.

Both the private and public sectors were represented among the panelists and the audience at the event, hosted by the Swiss ambassador. Speakers included:

• Ralf Heckner, Swiss Ambassador to the United States
• Jacques de Vaucleroy, Swiss Re Chairman
• Lianne Bosko, Property Lines Technical Director for Zurich North America
• Veronica Scotti, Swiss Re Public Sector Solutions Chairperson
• Ethan Zindler, Climate Counselor for the U.S. Department of the Treasury
• Kathleen Koch, a former White House correspondent for CNN who moderated the discussion  

Building resilience to extreme weather and climate risk while supporting economic growth in both developed and developing economies is vital, panelists agreed – if challenging. Some progress has been made on mitigation and adaptation, but rising prices for property insurance over the past several years are a signal that more work needs to be done.

Weather risk 'exists everywhere'

The recent U.S. hurricanes underscore that the risks are growing and shifting, Bosko said.

“We often focus on coastlines. But the risk exists everywhere,” she said. “Storms have much higher moisture content today. A flood doesn’t have to occur in a flood zone. Education is a huge part of what is needed. Our companies can be a very helpful part of that.”

Specifically, insurance providers with extensive risk engineering services, such as Zurich Resilience Solutions (ZRS), can share experience and knowledge on mitigation and adaptation measures, including emerging tools and tactics that are showing signs of value in extreme weather and other scenarios, she said.

“Resilience is one of the most important ways to address the increasing exposure,” Bosko said. “Zurich Resilience Solutions is helping businesses build resilience. And many of those actions translate very well into what you can do in a community. It’s not enough for individual insureds to build to a higher standard. We need communities to become more resilient at the same time.”

One example of why: If a family living in a neighborhood vulnerable to wildfires trims tree branches and clears brush from their roof and around their house, but their neighbors do not, then a potential fire still has plenty of other fuel to help it spread.

Supporting, implementing and enforcing building codes that require structural “hardening” in line with the climate-related risks in a given community is essential, panelists said. This will be an ongoing challenge as those risks are evolving rapidly and some are unknown until they happen.

In addition, some build-back-better improvements may cost more in the short term, and it can be difficult to convince builders and homeowners that they are a wise investment even if they bring other cost efficiencies, which in some cases may include more affordable options for property insurance.

Billion-dollar weather events

While awareness of climate risk is increasing, not everyone fully grasps how pervasive the risks are, panelists said.  

Zindler pointed out that 2024 storms in Iowa “are a big part of the climate story that’s not being told as much.” The state experienced record flooding and tornadoes this spring and summer.³

A status report on weather/climate disaster events causing over $1 billion in losses comes from the National Centers for Environmental Information.⁴

• In the first 10 months of 2024, there have been 24 events.
• The annual average for the most recent five years (2019 – 2023) is 20.4 events, adjusted for inflation.  
• The 1980-2023 annual average is 8.5 events, adjusted for inflation.

Many insurance providers are building their own maps and models for flood and other perils as risks rapidly evolve.

Figuring out what can happen and how to adapt for it is complicated by the fact that insurance is regulated at the state level, which creates many different requirements and approaches.

It’s one more reason that collaboration across multiple stakeholders and multiple channels is necessary to create more resilient communities. Bosko mentioned that this was underscored in a new report Zurich issued with Economist Impact, called “Resilience from the Ground Up: Assessing City-Level Approaches to Climate Risk and Adaptation.”

The report was based in part on a survey of 5,000 residents from 10 global cities. Eighty percent of New York respondents said their city is unprepared for climate-related risks, a concern shared by four out of five people in the survey. Survey respondents also shared their view on who should lead on climate resilience adaptation efforts; 50% said government should lead. Nonetheless, the report found that “businesses are critical but underutilised players in efforts to build urban resilience.”⁵

“Public-private partnership is the only way we come to any sort of solutions,” Bosko said. “You need local government who understands the community. Then you need federal government for policy. Our business is to understand risk and bring insights. That’s how we can help.”

References

1. Rajbhandari, A. (2024, October 14). Hurricanes Helene, Milton expected to cost insurers as much as $55 billion. Bloomberg. https://www.bloomberg.com/news/articles/2024-10-14/helene-milton-seen-costing-insurers-as-much-as-55-billion

2. Wile, R. (2024, October 23). Final jobs report before election likely to see hurricane impact — masking some economic gains. NBC News. https://www.nbcnews.com/business/economy/final-jobs-report-2024-election-expect-means-economy-rcna176775

3. Associated Press (2024, July 11). Devastated by record flooding and tornadoes, Iowa tallies over $130 million in storm damage. U.S. News & World Report.  https://www.usnews.com/news/us/articles/2024-07-11/devastated-by-record-flooding-and-tornadoes-iowa-tallies-over-130-million-in-storm-damage

4. NOAA National Centers for Environmental Information (2024). U.S. billion-dollar weather and climate disasters.  https://www.ncei.noaa.gov/access/billions/ DOI: 10.25921/stkw-7w73

5. Economist Impact (2024, October 20). Infographic: Resilience from the ground up. Economist Impact. https://impact.economist.com/sustainability/resilience-and-adaptation/resilience-from-the-ground-up