Building Resilience: How to Reduce the Risks and Costs of Natural Disasters

MAY 6, 2025

Since the start of 2024, 18 named storms, wildfires, and other catastrophic events have caused billions of dollars in damage and disrupted industries across the board. Last year marked the fourth costliest year on record for billion-dollar disasters in the U.S., with losses totaling $182.7 billion. The trend is accelerating — in 2024, there were 27 separate natural disasters causing over $1 billion in damage each, nearly double the number in 2018. This sharp rise is straining resources and making recovery efforts increasingly complex.

Immediate Steps for Risk Mitigation

Organizations should conduct regular risk assessments to identify potential vulnerabilities, make risk improvements where possible, and implement pre-emergency or business continuity plans for natural disasters.

1.  Catastrophe risk modeling (CAT modeling)

The absence of detailed building data and design features can lead to inflated loss estimates within carrier CAT models. By leveraging expert knowledge and data, organizations can adjust the parameters of their CAT models to incorporate more precise secondary characteristics, giving them credit for structural integrity and resilience. Consequently, utilizing secondary characteristics can reduce loss estimates and lower insurance premiums.

For example, USI reviewed the property program for a new client and determined that lenders were requiring coverage equal to 100% of the portfolio value for hurricane coverage. USI modeled the portfolio and determined that a limit equal to 50% of the portfolio value would cover the “worst case” estimated loss. USI first negotiated with the lender to determine the appropriate coverage limit, and then with the insurance carrier to agree on the cost and terms of the insurance policy based on the revised limit. As a result of USI’s analysis and negotiations, the allocated hurricane premium was reduced by $100,000.

2.  Targeted risk improvements

Depending on the natural catastrophe exposures present, you can minimize operational downtime and damage to your buildings by installing materials or systems designed to protect against these events. Currently, insurance carriers are focusing on wind exposure from severe convective storms and hurricanes, along with roof condition and age. Shingle roofs older than 15 years should be scheduled for replacement in the capital expenditure budget. Insurers typically require full roof replacements — not partial — to offer premium credits.

For wind, hail and flooding:

• Hail-resistant roof coverings – Using hail-resistant roof coverings or decking could prevent a roof replacement following a hailstorm.
• Flood panels – Installing FEMA-certified flood panels can prevent water from entering buildings through openings and protect sensitive equipment like transformers or HVAC equipment.
• Impact-resistant windows – Installing impact-resistant windows can reduce the likelihood of significant water damage often caused by hurricanes.

For wildfire risks:

• Defensible space – Remove of any combustible landscape plants or materials around the building.
• Tree branch clearing – Ensure tree branches near structures are cleared up to 30 feet in height.
• Ember-resistant vents – Install ember-resistant steel mesh on roof vents.
• Non-combustible roof – Replace roof coverings with non-combustible materials.
• Firewise certification – Check if the area is a Firewise-certified community.

By making small investments in building resiliency, you can significantly minimize damage and prevent prolonged periods of downtime after an extreme weather event. Some insurance carriers even offer a premium credit when these improvements are made to buildings exposed to potential catastrophic events. By using targeted risk control based on your natural catastrophe exposures, you can prevent and reduce loss, improve terms, and lower premiums.

3.  Emergency response planning

By evaluating the potential risks and impacts of different types of catastrophes, you can develop a plan tailored to your particular needs. An effective pre- and post-emergency response plan involves identifying the who, what, when, and how for each type of catastrophic event.

Who specifically is responsible for what duty?	When is the action required?	How is that task completed?

This process involves:

• Setting up a claims service team and a designated account adjuster who is familiar with your operations.
• Partnering with an emergency response contractor (ERC) before a loss to receive a priority response following an event.
• Arranging for critical operational components like generators, HVAC, refrigeration, or water.
• Developing an emergency response team and action plan.

The plan should be specific to your operations and exposures, and should designate specific individuals to carry out tasks before, during, and after a catastrophic event. The plans should be tested in a live scenario training to see where improvements can be made or to account for “what-if” scenarios along the way. By developing, formalizing, and implementing pre- and post-emergency procedures, you can protect your assets and people, minimize downtime, and become a more desirable risk to insurers, which can lower premiums and improve terms and conditions.