Disaster resilience can’t fall on insurers alone, Marsh’s Kaniewski warns

By Mia MacGregor

April 15 - (The Insurer) - Disaster resilience should be a shared priority, but while insurers must take the lead, they cannot shoulder the financial burden alone, according to Daniel Kaniewski, managing director for the public sector at Marsh McLennan and former deputy administrator for resilience at FEMA.

“Insurers play a critical role in collective resilience, and I think we, as an industry, should lead on this,” Kaniewski said to The Insurer during the ClimateTech Connect conference in Washington D.C. “But in doing so, we should also bring other industries along with us — including finance, real estate, and government.”

When it comes to encouraging resilience, he noted that people often look to insurance discounts as a solution. But the reality is more complex.

“When we talk about how to incentivize resilience, for better or worse, people jump to the idea of insurance discounts,” he said. “What I try to explain is insurance is priced based on risk. If you lower your risk, your insurance premiums will follow. It's a double-edged sword.”

“On one hand, the industry is best known for the fact that resilience positively impacts premiums,” he continued. “On the other hand, insurers are often asked to carry the water for all of the finance, insurance, and real estate industries.”

Kaniewski emphasized that while the federal government plays a major role in disaster resilience, state and local governments are just as important, if not more so, when it comes to the day-to-day impact of disasters on communities.

“It's largely driven by decisions made years or even decades ago, and they fall into two principal areas: zoning laws and building codes,” he said.

But those decisions aren’t always made with long-term consequences in mind, especially at the local level.

“If a decision was made by a local elected leader decades ago about development in a particularly risky area, it's the future residents of that property that are going to face the consequences of that decision.”

“I find it sometimes challenging for local elected leaders,” Kaniewski said. “Often, the economic benefits of development outweigh the potential negative consequences. And those consequences, from a disaster standpoint, might not materialize for years—long after that leader has left office.”

'EDUCATION IS THE FIRST STEP'

Kaniewski called for a broader, coordinated effort across sectors.

“Ideally, we would mobilize this ecosystem of stakeholders,” he said. “The insurance industry can play a principal role in doing so.”

That begins with more cross-industry communication, Kaniewski explained.

“We shouldn’t just be talking to each other within the insurance industry,” Kaniewski said. “Some of the other stakeholders may not be as familiar with how insurance operates or how premiums are calculated. Education is the first step.”

He added that while insurers shouldn’t be expected to fund all retrofits or resilience measures, they should still be seen, and see themselves, as key players.

“If we, as an industry, can help align other industries and governments at all levels around the common goal of making communities, states, and the nation more resilient, we’ll all share in the benefits,” he said.

Kaniewski also pushed back on the idea that climate adaptation is a controversial topic in today’s political landscape.

“From my perspective, climate adaptation has never been controversial,” he said. “In fact, I was a Trump appointee in the first administration, and I would often speak about climate adaptation. That sometimes caught people by surprise.”

He added: “But the reality is, climate adaptation is about making our homes, our buildings, and our environment more resilient today based on the impacts we’re already seeing. It’s not a political issue."

Kaniewski noted that “climate adaptation” is closely aligned with FEMA’s term “hazard mitigation,” which refers to investments made before disasters strike to strengthen infrastructure and reduce risk.

“It’s just a matter of dealing with the risks we face today,” he said. “Because we know that by reducing those risks, we’ll reduce the impacts for all of us in the future.”

During a House of Representatives subcommittee on emergency management and technology hearing on March 4 to evaluate FEMA's role, Kaniewski said resilience "must be our collective North Star, whereby we reduce the physical and financial impacts of disasters and transfer these risks off the backs of disaster survivors and the federal balance sheet".