Safeguarding Home Insurance: Reducing exposure and vulnerability to extreme weather

The Geneva Association's May 2025 report, Safeguarding Home Insurance: Reducing Exposure and Vulnerability to Extreme Weather, addresses the escalating challenges in the homeowners insurance sector due to climate change. It highlights the increasing frequency and severity of extreme weather events, such as floods and wildfires, that are leading to substantial economic and insured losses. These events are widening the protection gap, where many homeowners lack adequate insurance coverage, particularly in high-risk regions.

Key Insights from the Report:

1. Rising Insurance Challenges: The report details how extreme weather events are causing significant economic and insured losses, leading to challenges in insurance availability and affordability in various regions.

2. Socioeconomic Drivers: Factors such as increased exposure due to urban development in high-risk areas and rising rebuilding costs are exacerbating property risks related to extreme weather.

3. Stakeholder Impacts: The report examines how various stakeholders, including homeowners, communities, governments, developers, and insurers, contribute to and are affected by increased exposure and vulnerability.

4. Investing in Local Resilience: It advocates for scaling up targeted local resilience measures and implementing structural changes in valuation and mortgage systems to influence homeowner decisions positively.

5. Challenges Ahead: The report acknowledges the ongoing challenges in addressing climate risks and emphasizes the need for collaborative efforts among stakeholders to enhance resilience.

Riskthinking.AI's Contribution:

The Geneva Association’s report highlights critical regulatory momentum in Canada, especially following OSFI’s release of Guideline B-15, which mandates financial institutions to assess climate risks and develop transition plans. In direct response, OSFI partnered with Riskthinking.AI in 2024 to support approximately 400 financial institutions with climate risk data.

As part of this collaboration, Riskthinking.AI provided high-resolution flood risk data across 11 major metropolitan areas in Canada. This enabled institutions to georeference residential properties and assess their exposure to future riverine and coastal flooding, supporting both regulatory compliance and portfolio-level risk evaluation.

By offering forward-looking, stochastic climate modeling through its Climate Digital Twin (CDT™), Riskthinking.AI helps insurers and financial institutions quantify unmeasured tail risks and improve underwriting, pricing, and capital allocation. This directly aligns with the report’s emphasis on reducing exposure and vulnerability to extreme weather by leveraging advanced data and analytics to drive more resilient insurance markets.

Read the full report here