NATURAL DISASTERS
Natural Disasters : How It Affects Your Insurance Premiums And How To Plan
BY ALISON WILLIAMS
There have been higher than average natural disasters throughout the world , from floods in the Midwest to wildfires in California and Europe as well as tornadoes in Massachusetts . As weather disasters continue to grow , so does the cost of insurance . Unfortunately , these disasterrelated cost increases are not confined to the affected areas . That ’ s because most major insurance companies insure property across the nation and also use reinsurance companies who are even more widely spread in their exposure . While a risk of disaster is assessed for each location , the incredible mounting increases in damage claims over the past several years mean many of those costs have to be shared amongst all policyholders . So even though you may have never filed such a claim during the life of your business , you are still going to be impacted by increased rates because insurance carriers need to remain solvent in order to pay claims .
A January article in Insurance Business America reports that “[ t ] he cost of property insurance is expected to continue rising for the foreseeable future ,” citing Risk Placement Services ’ s 2021 U . S . Property Market Outlook . The effects will be felt by every commercial insurance buyer , according to RPS — whether through higher premiums , less capacity , stricter terms , or all three .
And according to industry experts , natural disasters cost the global economy $ 34 billion in the first half of 2022 , with just under half of those expenses covered by insurers . Such costs are only expected to persist and even get worse during
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