Is your Agency Climate-Ready for 2025? The Role of insurtech on Risk Management

During these recent years, the world has experienced record-breaking natural catastrophes, ranging from devastating wildfires to powerful hurricanes and catastrophic floods. These events have placed immense pressure on traditional insurance models, leading to significant coverage gaps and market disruptions, particularly in high-risk areas.

The escalating threat of climate change is evident in the growing number of natural disasters that wreak havoc globally. In 2019 alone, disasters such as the Australian and Amazonian wildfires, severe flooding in the United States, and prolonged droughts in India caused widespread devastation. According to Swiss Re, these disasters resulted in an estimated $133 billion in global economic losses. Of this, flooding accounted for approximately $82 billion in damages, yet only $13 billion was covered by insurance, as reported by insurance firm Aon.

The cost of these catastrophes for both the environment and society is high. This is further compounded by the fact that many of the financial losses caused by these disasters are uninsured, leaving customers, businesses, and governments to pick up the bill. As we look toward 2025, climate scientists predict even more frequent extreme weather events, making it imperative for insurance agencies to evolve their approach to risk assessment and management.