According to the National Centers for Environmental Information, the U.S. saw more than 400 weather and climate disasters in the last 45 years—including 27 just last year. The 2024 disasters resulted in $1 billion in losses to the U.S. economy, a share of the nearly $3 trillion lost because of natural disasters since 1980. As climate change progresses and the number of natural disasters is expected to climb, some employers are turning to catastrophe insurance for their employees to offset costs for both the workforce and the organization.
Employers have long utilized catastrophe insurance—which typically covers impacts related to major disasters like floods, hurricanes and earthquakes—to protect their businesses but increasingly are considering adding such coverage into their employee benefits packages.
“Employers are already doing business-continuity planning for extreme weather events, so it’s been a natural progression to say, ‘OK, the business is purchasing these products but the workforce hasn’t had access—and that impacts the ROI,’ ” says Nakita Devlin, CEO and co-founder of climate-focused insurance organization Ric.
An evolving environment for catastrophe insurance for employees
The uptick of employers offering catastrophe insurance for employees comes as organizations struggle to prepare workforces for climate change. Just 17% of global CEOs report having a strategy to protect employees from the effects of climate change, according to Forbes. Yet, the issue resonates with employees: A new survey from Deloitte found that 63% of employees surveyed globally don’t believe their organizations are doing enough to combat climate change and its impacts on the workforce.
The traditionally siloed nature of the insurance market has held some employers back from leveraging catastrophe insurance as an employee benefit, Devlin says. Often, employers may purchase a separate wildfire or hurricane policy for the organization, depending on where it’s based, she notes, but neglect to think “holistically.”
“When you look at climate change and extreme weather patterns, it’s impacting folks across all aspects of life,” she says. “But insurance, in general, has been slow to catch up to consumer needs.”
Typically, Devlin adds, the number of regulatory hurdles related to insurance sales has had most in the insurance industry working directly with risk managers—overlooking the consumer market that could also benefit from the products.
It’s an approach that needs to change, particularly as shifts in the new federal administration mean that fewer dollars could be available for emergency management, she says.
“We’re going to see a lot of federal funding that was previously available for catastrophe recovery not as widely available,” Devlin predicts. “Employers operating in these communities need to recognize that people are going to be looking for a private market solution.”
A forward-thinking approach to employee benefits
Catastrophe insurance as an employee benefit enables employers to provide affected workers immediate financial support for the range of impacts from disasters. While some victims may suffer property damage, they could also be dealing with loss of possessions and an inability to work in the immediate aftermath.
That support, Devlin says, can enable affected employees to recover faster and get back to work more seamlessly—all while promoting better mental health.
Given the widespread recognition among employees of the coming impacts of climate change, catastrophe insurance can also help employers position themselves and their benefits offerings as progressive and forward-thinking.
“There’s no way for employees to access these products without their employers,” she says. “This is a huge, huge opportunity for employers who recognize the disruptions to productivity from climate change and extreme weather and who want to get ahead of it.”
A ‘champion’ for the workforce
For HR leaders making the business case for adding catastrophe insurance as an employee benefit, it’s important to emphasize the companywide impact of this type of employee support, Devlin says. Helping employees quickly get back on their feet after a disaster doesn’t just have an “HR benefit.” It can improve metrics across the business.
Importantly, as leadership looks to tighten the purse strings in an uncertain economy, HR leaders can communicate the value of investing strategically in employee support. For instance, after the recent L.A. wildfires, many employers stepped up and helped their workforces financially—expenses that could have been absorbed through catastrophe insurance.
“A lot of employers are already making these dollars available to employees. There’s a real expense they’re incurring if employees don’t have access to a catastrophe insurance product,” Devlin says.
Those are costs that could continue to rise. This year saw the hottest-ever January on record, and experts predict that, as warming persists, extreme weather will follow.
“We see catastrophe insurance as a way to help the workforce become stronger and more resilient to climate change,” Devlin says. “Employers can be the champion for their workforce to give them access to this type of benefit that will be incredibly crucial as we move forward.”
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