Climate Change Is Breaking Insurance. Here’s How Tech Could Save It. (Christopher Mims, 12/10/23, WSJ)

Owners of homes and businesses have watched with alarm as major insurance companies have stopped offering coverage in California, Florida, and other parts of the country prone to natural disasters. But this shift has also created an opportunity for new types of insurers.

The secret sauce of these startups is technology. They are using better data science and incorporating artificial intelligence. Some, like FloodFlash, use on-the-ground sensors that enable an automatic payout when a catastrophe occurs.

The need for new ways to insure against catastrophes arises from the increasingly extreme nature of our planet’s weather. As we put more infrastructure of every kind into harm’s way, that’s leading to bigger losses for insurers. In the 1980s, the U.S. suffered an extreme weather event that cost $1 billion every four months. Now, one is happening every three weeks, according to the U.S. National Climate Assessment, released in November.

“If you had to pick a canary-in-the-coal-mine industry to measure the extent to which climate change is real, I think insurance is probably the best one I can think of,” says Max Clarke, chief executive of Plover Parametrics, which uses data to structure parametric coverage offered by insurance companies. “The balance sheets—they’re not going to lie.”