Investing in resilience is becoming a key part of how insurers decide on coverage, driven by the growing impact of climate change. Jason Kaminsky, CEO of kWh Analytics, explains that while insurance policies are usually short-term, the increasing number and severity of climate events are changing things. In the renewable energy sector, this means insurers can no longer rely on short policy periods to shield them from long-term risks. Instead, they are turning to more detailed and specific data about the assets they insure.
Kaminsky points out that underwriting now involves a close look at the actual equipment and how it is used. Details like the type of solar panels and their installation matter a lot more in pricing insurance. This shift requires high-quality data that doesn’t just show if a loss happened, but explains why. Unfortunately, much useful data is often stuck in silos and doesn’t reach the underwriters who need it.
Artificial intelligence is helping with underwriting and risk assessment but isn’t a complete solution. According to Kaminsky, clear, detailed information and human judgment remain essential. Understanding which materials or setups improve resilience is crucial for better decisions.
Pricing insurance based on resilience instead of just risk is starting to take shape, though it’s still early days. Kaminsky expects that in the next few years, insurers will have stronger signals to judge how resilience investments affect pricing. New products and policy changes that reward better risk management are emerging.
With climate threats increasing, insurers need better tools to assess these changing risks. Kaminsky also stresses the important role brokers play in this process. Brokers are the link between insurers’ innovations and clients making smart choices. They help clients understand how investments in resilience can lower insurance costs and improve coverage.
Kaminsky admits even industry insiders don’t always know about available incentives. For example, in California, certain home improvements can reduce insurance premiums, but many people, including those in the business, might be unaware.
He believes brokers should use data from underwriting to guide clients thoughtfully. Simply offering a better price isn’t enough unless clients understand what drives it. Clear communication and transparency are vital as underwriting focuses more on resilience and investments.
The insurance industry is slowly getting better at treating resilience as a factor in pricing policies. As climate events become more frequent, this approach will be essential to protect assets and help clients make smarter insurance decisions.