The devastation in Texas and California in 2025 highlights inconvenient truths with respect to U.S. property-casualty risk. Recent reporting surrounding these events suggests some damage from recent floods and wildfires could potentially have been prevented with better flood siren systems or vegetation management, respectively. We will not delve into the nuances of these arguments, but their very existence suggests a society that has run out of patience (if there ever even was any to begin with) for losing homes and loved ones to weather.
Insurance is an industry filled with professionals who take immense pride in helping people and businesses rebuild after tragedy. At the same time there are some public perceptions in the aftermath of the recent events that not enough people were helped and that having to navigate complicated claims processes while wounds are fresh retraumatizes victims. Similar to claims that these events could have been prevented, the mere existence of these perceptions is a call to action for the industry to make innovations that result in the best possible experience for its public.
Such is the focus of this month’s AR. Our two features, by AR writers DJ Falkson, FCAS, and Sandra Maria Nawar, FCAS, explore innovations that all but the most careful observers may have overlooked. Parametric insurance provides a technologized pathway to expedited payouts for those who may fall in harm’s way. Investment in climate adaptation helps fortify communities and homes against the disasters of today and tomorrow. This, in turn, presents a novel opportunity for institutional investors such as insurers to do well by doing good.
These innovations are not without challenges. Basis risk has been an inhibitor of scale for parametric, while the majority of climate finance has historically sourced from the public sector (and has lagged what experts view as need). However, as an old saying goes, every problem is an opportunity in disguise. As a result of recent innovations, parametric insurance and adaptation finance are better positioned to increase insurers’ access to underserved markets, prevent losses before they happen, and rebuild strained public perceptions (whether fair or not). Actuaries can help. Are you in the solutions business?
