Participation in a group captive can help companies save on insurance costs and provide access to extensive risk- management resources, including industry-specific expertise. These attributes are a source of value in the best of times, and today’s inflationary conditions may increase their appeal for certain types of companies.

The main drivers of rising flood losses are related to economic growth and urbanization. Coastal development puts more property at risk and eliminates ways for water to flow or to be absorbed. Other factors – such as aging or absent flood-control infrastructure – also affect losses. Extreme weather and rising sea levels exacerbate the threat.

While awareness of weather and climate risk has grown in recent decades and much action is being taken, a lot of work remains to establish a mindset focused on resilience and pre-emptive mitigation.

Wildfires play a complex role in overall climate risk that insurers need to understand and develop strategies to address. Traditional risk transfer isn’t sufficient to address these chaotic, interconnected perils – but ceasing to insure complex risks isn’t a strategy for long-term success. What’s needed are risk reduction, pre-emptive damage mitigation, and a deeper understanding of the evolving nature of this hazard. Insurers are well positioned to lead the way.