The insurance industry is going to feel the effects of climate change head-on, perhaps more so than any other. As weather, fire, and storm-related damage to homes, crops, cars, and businesses continues to increase globally, the insurance industry must brace itself to pay more frequent, higher claims than ever. 

A 2019 climate change survey of industry respondents by Central Banking states: “The insurance and banking sectors are the areas of the economy on which climate change will have an impact. This was the view of the overwhelming majority of respondents, with 87% and 80% choosing them, respectively.”

(source: Central Banking)

If this is to be believed, many within the industry are already well aware of the risk increased climate change activity poses to the global insurance industry.

Between local events and announcements designed to inform individuals in high-risk areas to education programs geared towards severe weather, the insurance industry is playing its part in preparing the public for these events. After all, it has a vested interest in people securing themselves and their property against them. But there’s another side to the industry that’s addressing the issue as well: insurtech.

A Natural Solution for Natural Disasters

It’s the consensus of most climate change experts that our world will be a radically different place by 2050. Using data and tech to help prevent, control, and mitigate the impact it will have on communities is of paramount importance, and presents a unique opportunity for insurtech. 

No one wants to risk losing their property to weather related damage, and insurers definitely aren’t looking forward to paying those claims either. The easiest way to begin preparing for these events isto prepare the people who will be affected - and insure them in a way that makes sense.

Using tech like AI, data analytics, and satellite imaging, insurtechs around the world are making an effort to assist high-risk areas in the event of droughts, wildfires, storms, and flooding - disasters many are underprepared for.

Recent tornadoes ripped through Ohio and the central U.S., leaving many shocked that they didn’t have proper insurance coverage to repair their homes, cars, and other personal property. However much owners suffer, renters suffer even more when they realize their landlord’s insurance doesn’t cover their personal damages.

In cases like these, renters and personal property insurtechs provide easy, affordable ways for underinsured individuals to prepare for the worst. Highly rated insurtechs like Lemonade, Hippo, and Jetty offer fast, affordable home and renters insurance that can cover you in the event of an emergency. This kind of easy, cheap insurance options are becoming increasingly important. Pew Research Center found more U.S. households are renting than at any other point in a 50 year period.

The Power of Insurtech in High-Risk Areas

When it comes to issues like climate change, not all places are affected equally. In case you don’t believe that, check out a recent Business Insider article that outlines where insurance workers would choose to live in the U.S. in order to avoid them. Between wildfires, flooding, and droughts, there’s no shortage of problems for insurtech to begin addressing.


In the U.S., California is a prime example of a state feeling the intense effects of climate change. The state experienced its worst wildfire season in history in 2018, which caused over $9 billion in insured losses alone, according to the state’s Insurance Commissioner. A grim statement from the chief of the U.S. Forest Service says, “it’s always wildfire season now.” 

And it’s not just in the U.S. The U.K. has already experienced more wildfires in 2019 than any other year on record, and the damage is staggering. An intense drought that affected Europe in 2018’s summer left the region incredibly vulnerable to increased fire damage. 

This is where insurtechs like Cape Analytics come in. Cape Analytics is a California-based startup that using drone imaging and data analytics to identify homes and properties that are most at-risk for a fast moving wildfire. Its technology can help insurers notify and assist homeowners in dangerous areas in order to prevent or minimize losses. 

(sample of Cape Analytics wildfire risk assessment, source: Forbes)

“We want to streamline the process for our customers so they can be more strategic in assessing risk and determining if mitigations exist,” said Kevin Van Leer, manager of client solutions at Cape Analytics. “We can help insurers work with customers to develop mitigations that reduce the risk to their property.”


Another major climate change consideration is droughts, and the disastrous impact they have on crops around the world. Europe is still reeling from one of its hottest and driest summers in decades. German farmers are anticipating drought this summer after a dry winter and the impact of last summer’s drought that affected 90 percent of the country. Countries like Sweden, the Netherlands, Poland, and the Czech Republic are faring no better as farmers prepare for losses that could number over a billion euros. The cause is not up for debate.

“It’s certainly been intensified by climate change and these events will unfortunately become more frequent,” Jean-Pascal van Ypersele, one of the world’s leading experts on climate change, told Euronews’ Bryan Carter.

Droughts are a major threat to crop yields worldwide, and one of the insurtechs looking to help combat those losses is WorldCover. The New York and Africa-based climate insurance provider is looking to help farmers insure their crops against weather related damage, particularly drought. 

(sample of WorldCover’s technology, source: TechCrunch)

Their mission is “to help farmers in the developing world reduce risk,” and they’re beginning with a $6 million Series A funding round, led by MS&AD Ventures. WorldCover uses satellite imagery, on-ground sensors, mobile phones, and data analytics to help farmers in high-risk, emerging markets insure themselves against crop damage. As of right now, the company operates in Ghana, Uganda, and Kenya, and is hoping to expand to other high-risk areas like India (already reporting similar issues), Mexico, Brazil, and Indonesia in the near future.


Several states in the central and southern U.S. are experiencing record flooding in 2019, including Arkansas, Oklahoma, and Louisiana. Continuous rainfall and frequent tropical storms are forcing thousands to leave their homes and belongings behind due to flash-flooding and overflowing rivers. The Mississippi and Arkansas Rivers are reaching unbelievable highs, nearly breaking the 1927 records during the ‘Great Flood.’ 

“This is a flood of historic magnitude,” Arkansas Governor Asa Hutchinson said in a recent news conference.

The magnitude of flooding invokes the obvious question about flood insurance and whether or not the average household in high-risk areas is prepared and insured in the event of a flood. According to federal and insurance experts, most of them aren’t.

Enter Neptune Flood, the first digital-only, data-driven flood insurer in the U.S. and offers fast service, affordable rates, and competitive coverage. The company’s automated service lets homeowners price their home’s risk for flood, get a quote, and buy flood insurance in under three minutes. What’s more, their data might be more accurate than that of Federal Emergency Management Agency.

“Unfortunately, FEMA maps are often considerably outdated and don’t provide an accurate view of your vulnerability to flooding,” said Jim Albert, founder and CEO of Neptune Flood. “At least 25% of all flooding happens outside of designated high-hazard areas, affecting homeowners who have been told they don’t need flood insurance. The truth is that floods now occur in all 50 states and every month of the year, and we are thrilled to be able to offer everyone the ability to protect their most valuable asset for as low as a dollar a day – no matter where they live.”

(source: Neptune Flood)
Recently, Neptune announced a partnership with fellow insurtech Hippo, which offers home and renters insurance for up to 25 percent less than a traditional insurer. The two companies are partnering to address the issue of increased flooding in underinsured areas.

“Neptune is forming relationships with transformational distribution partners with a passion for changing the way households think about and buy insurance,” said Neptune Flood CEO Jim Albert. “Hippo is an example of our commitment to best in class partners who share our values in educating and helping our neighbors better protect their homes against the risk of flooding, while saving time and money.” 

Opportunity Lies in Collaboration

“Climate change is a massively important topic for anyone interested or working in insurance. The industry was one of the first to recognize climate[‘s impact], because it recognizes the nature of catastrophes around climate change,” says Ruth Foxe Blader.

Blader is the managing director of venture-capital company Anthemis, and she focuses on targeting insurtechs that help carriers minimize climate-related risk. It’s only natural that, in a time when so much is changing environmentally, the insurance industry is focused on adjusting as well. As mentioned earlier, insurance is expected to be the number one industry impacted by climate change, and many within the industry are well aware of it.

Insurtech, and tech in general, offers a unique chance for the industry to get ahead of climate change momentum. Many insurers are already working with or acquiring tech companies that deliver high-end solutions that help them anticipate and reduce losses as well as plan for damage.

While the insurance industry has shown an eager interest in insurtech through massive investments and funding rounds, true collaboration between the two markets is needed in order to properly prepare the $5 trillion dollar global insurance industry against increasing climate change. 

Insurtechs around the world are showing ingenuity and proactivity when it comes to addressing these issues, as are traditional insurers. Through integration and collaborative efforts, the industry can prepare for what’s to come and focus on what’s most important: insuring the communities, business owners, and individuals most that will be most affected by present and future climate change.

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