Climate Change

The Climate Shift: Preparing a Response Plan

Key Findings

81% of global carriers are adjusting resource management strategies to handle more frequent catastrophic (CAT) weather events.
Nearly two-thirds of global and North American carriers are investing in technology to enhance operational efficiency and manage downtime between CAT events.
Rising temperatures, particularly 100°F conditions, are driving an increase in North American workers' compensation claims.
40% of North American carriers are expecting enhancements in monitoring and reporting systems for heat-related incidents due to climate change.
62% of North American carriers see an increase in demand for climate-specific insurance products, reflecting a 27-percentage point increase compared to the previous year.

Adjusting resource strategies as climate change intensifies

The accelerating impact of climate change is driving more frequent and severe weather events globally — prolonged droughts, extended wildfire seasons, severe rainfall, hurricanes, and storm surge flooding — all escalating risks and response costs.^[¹^] As a result, 81% of global carriers are adjusting their resource management strategies to better handle these events, particularly during downtimes of CAT events.

In North America, 58% of carriers report moderate shifts in resource management, with 15% making significant moves toward flexible, scalable resource models—higher than the global average of 13%. This approach allows carriers to scale resources effectively for unpredictable demand without overextending during quieter periods.

Prioritizing technology and flexibility to strengthen CAT preparedness

With escalating climate risks, leveraging best practices enables organizations to stay agile and ready.

GB’s survey results indicate that two-thirds of carriers both globally and in North America are prioritizing technology investments to enhance operational efficiency as the top CAT downtime best practice.

Our survey highlights a global recognition that investment in advanced tech solutions can not only massively improve real-time data access, expedite claims processing, and improve customer service, but also support resilience against the growing prevalence of CAT events.

A secondary priority, according to over half of global survey respondents, is maintaining a scalable pool of contract adjusters. This approach enables carriers to manage surges in claims after CAT events without overstretching their existing workforce and minimizing running costs during downtimes. Meanwhile, in North America, 50% of the surveyed carriers are focusing on cross-training employees for flexibility. This practice can help minimize idle time, optimize resource allocation, and reduce reliance on specialized roles while improving employee engagement.

The rising mercury and uncertainties of climate change are posing greater risks on workers, especially those employed in outdoor working environments, with heat-related illnesses, including heat exhaustion and heat stroke.

GB’s data shows an uptick in heat exposure claims in North America since 2021, reflecting a growing challenge in managing workers’ compensation claims.

Aligning with these findings, 46% of carriers in the region have noticed a moderate to significant increase in the frequency of such claims associated with extended exposure to intensely hot conditions.

The sentiment remains consistent worldwide, with 47% of global carriers reporting the same.

Reflecting on this, organizations have begun to implement enhanced safety measures and long-term strategies, such as revising workplace safety policies and adjusting operational hours, to effectively address the ongoing impact of heat exposure on employee health and claims frequency.

Rising demand for climate-specific insurance

As adverse climate trends intensify, risk management strategies for insurers and clients face unprecedented pressures. Globally, 57% of carriers expect climate trends will force their clients to make adjustments to their insurance coverage and risk assessments, followed closely by investments in health and safety training programs (45%). While the North American carriers agree that adjustments to insurance coverage and risk assessment will be the most impacted, they believe the second-highest major impact will be on the monitoring and reporting systems for heat-related incidents.

Due to the severity of climate change-related impacts, carriers are observing an increasing demand for climate-specific insurance products. Globally, more than two-thirds of surveyed participants report a rise in requests for climate-specific insurance lines and coverage options from policyholders. In North America, 62% of carriers note a similar demand, reflecting a 27-percentage point increase in the trend compared to the previous year.

The shift in client requirements also affects how carriers assess risk, as they must increasingly consider evolving climate impacts when underwriting policies and calculating premiums. This underscores the growing need for targeted protection against climate-driven events as environmental conditions change.

A collaborative approach to climate resilience

The increasing frequency and intensity of climate-related events highlight the industry’s need to adopt more proactive, forward-looking strategies. Scaling resource management, investing in advanced technologies, and developing climate-specific insurance solutions are critical steps for building resilience. By focusing on these priorities, carriers can anticipate emerging hazards, address evolving client needs, and create frameworks that safeguard people, assets, and communities.

Collaborating with trusted partners who have deep expertise in claims management and risk mitigation can provide support in navigating these complex challenges. A collaborative approach not only enables the industry to adapt more effectively to intensifying climate risks but also fosters long-term resilience and innovation in insurance practices.

^{[1] “}^{U.S. Billion-Dollar Weather and Climate Disasters 2024}^{”, NOAA National Centers for Environmental Information (NCEI), Accessed on 9 Dec 2024.}