Imagine waking up to news that yet another massive wildfire has torn through a region, leaving billions in damage behind. It’s not just heartbreaking—it’s becoming the new normal. In 2025, the numbers are in, and they’re staggering: global insured losses from natural disasters have climbed to around $107 billion, marking the sixth straight year we’ve blown past the $100 billion mark.
I’ve always found it fascinating how these events, once considered rare, are now almost predictable in their frequency. But what’s really catching my attention lately is the way the insurance industry is responding—not just by cutting checks, but by rolling up their sleeves and getting involved in prevention.
The Rising Tide of Catastrophe Claims
Let’s face it: climate-related disasters are hitting harder and more often. Wildfires and severe thunderstorms are the culprits behind a whopping 83% of those insured losses this year. One event alone—the devastating fires in the Los Angeles area back in January—racked up an estimated $40 billion in insured damages, making it the most expensive wildfire outbreak on record worldwide.
Part of the reason costs are skyrocketing? Property values keep rising, and more people are building homes and businesses in high-risk zones where urban areas meet wildland. It’s a recipe for trouble when sparks fly.
As one economist in the field put it, the volatility is there year to year, but the overall trend is unmistakably upward. Strengthening defenses—prevention, better protection, and preparedness—is no longer optional if we want to safeguard lives and assets.
Why Losses Keep Climbing Despite Better Warnings
You might wonder: with all our advanced weather forecasting, shouldn’t we be dodging these bullets better? In some ways, yes—evacuations save lives like never before. But when it comes to property damage, exposure has grown faster than our ability to avoid it.
More valuable structures in vulnerable spots mean even a “typical” storm or fire season translates to record payouts. Add in inflation on construction costs, and repairs aren’t cheap. It’s a tough cycle that’s pushing insurers to rethink their approach.
- Higher real estate values amplifying claim sizes
- Increased development in wildfire-prone interfaces
- More intense severe weather events fueled by climate shifts
- Growing inventory of expensive assets like solar installations
Honestly, it’s a wake-up call. Paying out claims year after year isn’t sustainable for anyone—neither the companies writing policies nor the businesses and homeowners footing rising premiums.
The Shift Toward Proactive Risk Mitigation
Here’s where things get interesting. Insurers are no longer content to simply assess damage after the fact. Many are now requiring—or strongly incentivizing—policyholders to take concrete steps to reduce risks upfront.
In wildfire areas, that often means creating defensible space: cutting back trees, clearing brush, and maintaining a buffer zone around buildings. For hurricane-prone regions, it’s all about tougher construction standards—think reinforced roofs, impact-resistant windows, and elevated foundations in flood zones.
We can’t stop the storm from coming, but we can absolutely minimize the destruction it causes when it arrives.
That’s the mindset shift I’m seeing, and in my view, it’s long overdue. Prevention pays off in fewer claims, lower premiums over time, and—most importantly—properties that stay standing.
Inside a Unique Engineering-Focused Insurer
One standout example is a mutual insurer specializing in commercial and industrial properties. They operate a dedicated research facility where engineers put building materials and systems through rigorous real-world simulations.
Picture this: massive test rigs recreating Category 2 hurricane winds, pounding hailstorms, ember showers from wildfires, even seismic shakes and industrial explosions. It’s part science lab, part proving ground for resilience.
Their CEO describes the company as “an engineering firm that happens to do insurance.” They won’t offer coverage without a thorough risk assessment, and they bundle engineering advice with every policy. Nearly 2,000 engineers work directly with clients to pinpoint vulnerabilities and recommend fixes.
Upgrades might include sturdier wall assemblies, better-secured roofing, or deployable flood barriers. The goal? Turn potential total losses into minor repairs—or no damage at all.
I’d much rather see clients invest that money in strengthening their properties than handing it over in higher premiums. In the end, everybody wins.
– Industry executive
To sweeten the deal, they offer a resilience credit—essentially returning a portion of the premium to fund approved improvements. Smart move, if you ask me. It aligns incentives perfectly.
Hail: The Under-the-Radar Billion-Dollar Threat
While hurricanes and wildfires grab headlines, hail has quietly become a massive cost driver. It’s now one of the priciest perils, especially as larger hailstones accompany intensifying thunderstorms.
Roofs take a beating, but a growing concern is damage to solar panels. Those photovoltaic arrays proliferating on commercial buildings? They’re surprisingly fragile against big ice chunks traveling at terminal velocity.
At the research campus, they fire golf-ball-sized (and larger) hail from a specialized cannon to test durability. Materials that pass earn certification, giving property owners confidence they’re installing gear that can take a hit.
They tailor tests to regional hail patterns—different areas see different typical stone sizes. The result: standards that match real-world risks.
- Impact testing for roofing membranes and shingles
- Photovoltaic panel resilience verification
- Certification programs for manufacturers
- Guidance on optimal installation angles to deflect strikes
If more owners demanded certified products, we’d likely see fewer totaled roofs and crippled solar farms after storms. Perhaps the most encouraging part is how this data-driven approach is spreading.
Other Insurers Joining the Mitigation Push
It’s not just the engineering-heavy players. Across the industry, companies are stepping up with tools and outreach.
Some focus on home and small-business policies, recommending smart devices like automatic water shutoffs, gas leak detectors, or remote appliance controls. Others proactively contact millions of customers with personalized coaching on property hardening.
Programs might include incentives for installing surge protectors, leak detection sensors, or backup generators. Every little upgrade chips away at potential claims.
When members adopt these measures—whether smart valves or monitoring devices—it directly reduces losses for everyone.
The ripple effect? More stable rates and greater availability of coverage in high-risk areas. Without mitigation mandates or encouragement, some regions might become effectively uninsurable.
Challenges and the Road Ahead
Of course, it’s not all smooth sailing. Upfront costs for resilience upgrades can be substantial, especially for older buildings needing retrofits. Not every property owner has the capital lying around.
That’s why credits, rebates, and partnerships with contractors matter so much. Government incentives could help too, though progress there varies by region.
Another hurdle: awareness. Many policyholders don’t realize how much control they actually have over their risk profile. Education is key—insurers sharing research findings and success stories can bridge that gap.
Looking forward, I suspect we’ll see even tighter integration between insurance and risk engineering. Perhaps mandatory assessments for high-value policies, or premium discounts scaled to verified improvements.
One thing feels certain: as losses mount, the old reactive model won’t cut it. The industry that’s stepping up now—helping clients build tougher, smarter properties—will likely lead the way into a more resilient future.
In the end, it’s a reminder that while we can’t command the weather, we can absolutely influence the outcome when it turns fierce. And with insurers increasingly in the prevention game, there’s real hope for bending that cost curve downward.
What do you think—will proactive mitigation become the standard, or will claims keep spiraling? The data so far suggests the former could save billions and countless headaches down the line.
