Protecting Insurability in a World of Escalating Natural Disasters

Insurance may seem like a protection that will always be accessible, but many property owners throughout the U.S. have learned otherwise. In the face of climate change and rising natural disaster losses, owners of risk-exposed and vulnerable properties (particularly in wildfire or flood zones) are finding that it can be extremely difficult and expensive to secure property insurance. To help prevent a widespread insurance crisis, the Tokio Marine Group, of which FICOH is a member, is supplementing conventional insurance offerings with solutions for loss prevention, mitigation and recovery.

Natural Disaster Losses Are a Trend, Not a Fluke

Insured natural disaster losses will exceed $100 billion for the sixth year in a row according to Swiss Re. In 2025, global losses reached $107 billion, with U.S. losses accounting for at least $89 billion of that number.

The causes behind these losses look a little different each year. In 2025, the Los Angles wildfire claims were a major factor. In 2024, Hurricanes Milton and Helene were major cost drivers, and in 2023, it was the wildfires here in Hawaii. Each disaster takes a toll on the insurance industry, as well as on the people impacted.

While the reported insurance losses are significant, the numbers don’t reflect the full impact on property owners. According to CBS News, research from United Policyholders shows that up to two in three of the Los Angeles wildfire victims are either uninsured or underinsured. Some disasters have even worse coverage rates. According to WCCB Charlotte, the North Carolina Insurance Commissions says that only 3% of homeowners in the state have insurance for floods and landslides, both of which are excluded from standard property insurance and require additional policies.

The Looming Insurance Crisis

As natural disaster losses push insurance premiums higher, more and more policyholders find themselves unable to afford coverage, leading to even higher rates of uncovered losses.

This devastating cycle is already taking shape in some parts of the country. In recent years, multiple insurers have exited California. According to the Los Angeles Times, insurers opted not to renew thousands of insurance policies shortly before the Los Angeles wildfires. Although some of these policyholders likely got some coverage through the FAIR Plan, California’s insurer of last resort, others went without coverage. Then the wildfires hit, and they lost everything.

As natural disaster losses continue to rise, there is a risk that more and more properties in additional regions will become too risky and too expensive to insure.

A New Playbook: From Reactive to Risk Control

The insurance industry has always played a crucial role in risk management, but traditionally, that role has been reactive. When a disaster strikes, the insurer helps make the policyholder whole again.

However, this model may no longer be sustainable, especially in areas with significant storm or wildfire exposures. Losses are simply too high, both for the insurer and the property owner. To remain economically viable, some insurers are beginning to focus on risk control, property hardening and loss prevention.

We’ve seen a similar shift in cyber insurance, where out-of-control losses prompted insurers to implement underwriting requirements that helped protect policyholders from losses, as well as offering risk management resources. And although cyber losses are still a threat, cyber insurance rates have fallen.

Now insurers can leverage modern technology to help businesses and property owners better understand their risks and take steps to protect losses. When insurers are able to help prevent or even just reduce losses, everyone wins.

Working Together to Build a Sustainable Future

Tokio Marine, the parent company of FICOH, recently acquired Integrated Design & Engineering (ID&E) as part of its ongoing commitment to building resilience in the face of rising natural losses.

ID&E provides consultancy services focused on natural disaster mitigation. It’s exactly what property owners need right now. Along with Tokio Marine’s other partnerships, this is a step toward controlling losses and helping policyholders stay insurable.

Right now, the problem is clear. If losses keep rising, premiums have to follow suit, and that quickly becomes an unsustainable situation. Instead, property owners need to take steps to mitigate their losses, and insurers are in a unique position to help them do so. When we work together toward the common goal of reducing losses, we can build a more resilient future.

Do you need help securing insurance solutions for your home or business? Find an agent.