Extreme weather is hitting harder and more often these days, and that’s causing big problems for insurers and reinsurers. The first half of 2025 was the second most expensive period on record for weather-related damage in the U.S., with California wildfires and powerful storms leading to huge losses. Traditional risk models, which rely mainly on past data, just aren’t cutting it anymore because the climate is changing too fast.
To keep up, insurance companies are starting to rely on real-time technology like AI and geospatial analysis. These tools help them assess risks more accurately and set prices smarter. Megan Kuczynski, CEO of ClimateTech Connect, says these technologies are essential for precise underwriting. She points to Swiss Re’s CatNet platform, which recently improved its flood modeling by bringing in expertise from a British company called Fathom. The knowledge from experts like former hydrologists is becoming more important as companies look to improve their risk models.
This shift isn’t just about using new technology but also changing how insurance money is spent. Some reinsurers are pulling back from risky markets and looking for new ways to allocate capital. In Connecticut, a partnership between the state’s Insurance Department and First Street Foundation is giving every homeowner access to detailed climate risk data. This kind of transparency helps both consumers and insurers understand risk better, and it’s encouraging reinsurers to back similar initiatives. States like Alabama are also stepping up with programs that help homeowners strengthen their properties against extreme weather, which influences how reinsurers think about long-term risks.
A big concern right now is the potential loss of important climate data from NOAA. Many climate models depend heavily on NOAA’s information, and if that data gets cut or delayed, it could mess up early risk predictions and how new models are built. Kuczynski says private companies are working on ways to keep these datasets available, either by partnering with NOAA or taking over parts of the work.
Besides sudden disasters, slower threats like rising sea levels, long heatwaves, and aging infrastructure are also changing how insurers see risk. For example, outdoor workers’ health during extreme heat is becoming a focus in places like Connecticut. Nature-based solutions, like coral reefs and controlled burns to prevent big fires, are gaining attention too. These natural fixes aren’t just good for the environment—they’re becoming part of insurance pricing and risk strategies.
Insurance has usually been about stepping in after damage happens, but now the pressure is growing to prevent losses before they occur. Kuczynski notes that while the insurance world tends to move slowly, there’s a lot more energy and focus on climate risks at events like Climate Week New York. Experts like Daniel Kanuski of Marsh McLennan emphasize that no single industry can fix these problems alone. Instead, technology, regulators, insurers, and consumers are all playing parts in a shared effort.
Some startups are helping push prevention forward. One example is Fora, which offers detailed risk checks for properties. Insurers use these reports to decide policy prices and even whether to offer insurance at all in very risky areas. Homeowners might need to take specific actions to qualify for coverage or better rates.
With climate risks growing and changing fast, the insurance industry is finally adapting in new ways. Technology, partnerships, and a focus on prevention are all shifting how risk is managed and shared. It’s a big change, but it could help protect more people and properties from the worsening impacts of extreme weather.