March 2022 finished with a record-breaking 249 tornadoes, January and February 2022 marked the driest consecutive on record in California for ski resorts, Kansas City broke the 130-year-old snowfall record and hurricane season 2021 was the third most active ever. Most homeowners and business owners are not financially prepared for these extreme weather events.
In recent years, the U.S. has experienced weather extremes not seen before in recorded history. Home and business owners generally look to insurance to cover the loss.
"The primary financial recovery mechanism is insurance," Stephen Bennett, Chief Climate Officer and Co-founder of the Demex Group told FOX Weather. "So typically your property insurance, your homeowner's insurance or your renters’ insurance will come in to help you rebuild, essentially rebuild your life, rebuild your structure, your home, replace the things that were damaged or were lost in that severe weather event."
A 2019 study found that 40% of homeowners living in "high-risk flood zones," according to FEMA.gov are "not at all worried about flooding in the next decade" and don’t carry the specific insurance.
Companies and individuals that don’t plan for the risk can quickly end up on the red side of the spreadsheet. A 1997 study, based on data from the California Department of Insurance, stated that 93% of homeowners insurance companies either stopped offering earthquake insurance or imposed strict limits after the 6.7 magnitude, Northridge earthquake in 1994.
The Demex Group plots weather and climate data for weather-dependent industries like insurance companies, golf courses, construction sites, plowing companies and even parking lots. Their research and forecasts, based on recent weather and climate trends advise companies on how to spread insurance risks and plan for tough years.
"Insurance companies are actually seeing these types of [severe weather] events change," said Bennett. "Weather patterns are shifting. It used to be that we typically saw severe weather in the spring and then a secondary season in the fall. We're starting to see that spread out across the calendar where we're seeing severe weather and well into the winter."
He pointed to unprecedented December 2021 tornadoes in North Dakota and Minnesota. Before December 2021, the NWS had not recorded a single December tornado in Minnesota and only issued two Severe Thunderstorm Warnings for Wisconsin in the past 26 years.
According to NOAA, 2020 and 2021 both experienced the highest amount of billion-dollar weather related disasters, 22 and 20 respectively.
"And insurance companies themselves, who are the primary mechanism to provide for financial recovery, they are seeing losses that they haven't experienced in their businesses before as the severe weather season expands," explained Bennett. "What our company is doing is appraising the risk of financial loss based on that extension of the hurricane season, which is linked to shifting weather patterns."
Demex then shows the insurance companies how to spread risk out across the year as to not leave them struggling with survival after an unanticipated disaster.
Recent studies indicate that more public policy changes are needed before homeowners opt for expensive coverage for disasters infrequently experienced.