Broker Check

How Climate Change Affects Property Insurance

December 21, 2022

A post by insurance consultants MB Davis Group (at describes how larger and more frequent climate events are putting pressure on commercial property insurers.

According to the National Center for Environmental Information, since 1980 the United States has had 338 climate events with damages over $1 billion, for  a total cost of $2.2 trillion with over 15,000 deaths. These events includes floods, droughts, heat waves, hail, hurricanes, tornados, wildfires and winter storms. Florida, Louisiana, Texas, Puerto Rico and California have suffered most. Over the last four decades these events have increased in both frequency and severity; if 2021 is any indication this trend is continuing.

There are ten ways these catastrophes threaten the insurance market:

  1. Diminished capacity of commercial insurers.
  2. Higher property and liability insurance premiums.
  3. Weaker  insurers become insolvent.
  4. Reinsurers have more at risk.
  5. Insurance policies become more restrictive.
  6. Insurance buyers cannot expect renewal on the same terms and conditions.
  7. High risk properties become uninsurable.
  8. Higher overall costs of climate related expenses.
  9. Higher claim and rebuilding costs due to large areas affected. 
  10. Insurers reduce or cancel investments in industries contributing to climate change.