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Supporting Resilient Communities

Leaders in the insurance industry are announcing new investments to support resilient communities. Here’s why:

According to leading models, the likelihood of severe weather causing at least $1 billion in insured losses in the United States annually is 92 percent, or almost certain to occur every year. An estimated $10 trillion in insured property along the Atlantic and Gulf Coasts is vulnerable to tropical storms. And according to the latest estimates, Hurricane Matthew alone will cost the United States anywhere from $1.5 and $5 billion in insured losses.

As these numbers show, there is a compelling economic and fiscal rationale for investing in resilience and preparedness for natural hazards – one that requires work not only on the part of the Federal Government, but also the private sector. That’s why the Federal Government has been working closely with leaders in the private sector, and responding to specific recommendations from States, tribal communities and local leaders, to integrate resilience into the fabric of how we build, rebuild, plan, and prepare for the impacts of climate change.

As a part of these continued efforts, today the Administration is releasing a report that identifies additional opportunities for continued collaboration with the private sector and ways to help ensure that future investments will be climate smart from the start. Further, today we’re announcing additional commitments by leaders in the insurance industry to increase the sharing of risk data, develop approaches to better communicate risk, and support innovations to reduce the risks and public costs of disasters and finance investments in resilience.

The commitments announced today include:

Swiss Re. Swiss Re will offer up to a total of $2 billion of financial risk capacity to U.S. public entities over the next five years. This includes entities within the Federal Government, K-12 public school systems, municipalities, counties, States, and critical infrastructure assets, such as utilities and state-sponsored insurance risk pools. Swiss Re will also engage in dialogues with public entities regarding the risks associated with natural disasters, including advising risk managers, CFOs and their peers on financial risks and options for financial protection. In addition, Swiss Re will provide access to CatNet, a proprietary geo risk tool designed to provide assessments of natural hazard risk on individual locations or entire portfolios of assets to selected public entities.

North Carolina Insurance Underwriting Association. The North Carolina Insurance Underwriting Association (NCIUA) is announcing a new six-month pilot program beginning January 2017. All policyholders in rating territories comprising the Outer Banks and Barrier Islands of North Carolina will receive an endorsement on their homeowner’s policy. If the policyholder suffers a covered cause of loss during the pilot program that damages their roof more than 50 percent, the policyholder may elect to upgrade their roof to IBHS Bronze Level Fortified-Roof standards at no cost to the policyholder.

Insurance Institute for Business and Home Safety. In 2017, the Insurance Institute for Business and Home Safety will develop FORTIFIED Commercial to support resilient design and retrofits for both new and existing small and mid-sized commercial structures, including retail and public buildings. This will help fortify such structures from hurricane, high wind, and hail events. 

FM Global. Over the coming year, FM Global will conduct on-site risk assessments and provide risk improvement recommendations for approximately 4500 schools, hospitals, and transportation-related facilities. They will advise the owners of these facilities about federal programs that can assist them in securing favorable loans for improving resilience. FM Global will also conduct webinars with federal partners to inform education, healthcare, state and municipal leaders from around the country about specific measures that can improve the resilience of schools, hospitals and important public facilities.  Further, FM Global will employ its RiskMark® risk quality benchmarking tool to apply data-driven insights from hundreds of thousands of client visits to help school, hospital and public facility owners compare their current and future resilience against similar properties around the country.

Munich Re. Munich Re is committing to invest in new research in 2017 on the costs and benefits of approaches to siting, building, and maintaining manufactured home structures to reduce the damage done to these homes in coastal and inland wind events. Preliminary research suggests that the potential reduction in property damage and insurance losses could be as much as 50 percent through the use of more resilient standards, known as Zone III standards, in all new manufactured homes.

As these commitments further demonstrate, climate action is a matter of fiscal responsibility. That’s why, in addition to forging partnerships with the private sector to act on climate, Federal agencies continue to move forward on this work. For instance, the U.S. Geological Survey is launching a new Streamflow Information public-private partnership in support of the National Streamgage Network. The Federal Emergency Management Agency (FEMA) is pursuing reinsurance opportunities to diversify its toolkit; developing a new cooperative research and development agreement for 2017 with re/insurance and academia to increase the sharing of data, modeling software, and analytic products; and developing the concept of a Disaster Deductible to incentivize States and local communities to adopt and implement programs that increase their resilience to disasters.

Just as we have for greenhouse gas mitigation – from our partnerships on clean energy and clean transportation to those around methane and hydroflurocarbons – the Administration is leveraging a collaborative approach with the private sector to unleash innovation and impact yet again. Today’s announcements show how this approach is yielding better climate risk identification, adaption, and resilience practices – and positioning these practices for success over the long term. Through this sustained commitment from government and private sector leaders, the places where we live, work, and gather will better withstand the more frequent and intense weather events and other impacts of climate change that are already underway and those that can no longer be avoided.