Incentivizing resiliency is key to coping with climate risk: Triple-I's Kevelighan

By Isha Marathe

April 15 - (The Insurer) – As the insurance industry shifts gears from repairing losses to predicting and mitigating them, the Insurance Information Institute is launching an incentivization initiative to lower the risk of catastrophe-prone properties during a climate disaster, said Sean Kevelighan, the CEO of Triple-I.

In an interview with The Insurer on the sidelines of the inaugural ClimateTech Connect Conference in Washington, D.C., Kevelighan said: "Nine out of the top 10 record years for losses were in the 2000s, and I'd be willing to bet we break that record, to put them all in the 2000s."

To combat the growing insurance affordability and accessibility crisis, Triple-I is currently focused on answering the question of "How do we incentivize resiliency?" he said.

Resilience is an insurer's ability to anticipate shocks and increase the proportion of losses covered if a disaster does strike. For property owners, resilience means building physical structures that can withstand the evolving climate landscape.

To do so, the organization is emulating the Strengthen Alabama's Homes program, an initiative by the Alabama Department of Insurance, funded by the states' insurance industry, which provides grants to residents of Baldwin and Mobile Counties in Alabama for residential wind mitigation on existing, owner occupied, single family homes.

Kevelighan said Triple-I is attempting to scale Alabama's program beyond just the policyholders, trying to include various stakeholders. The Triple-I initiative, which is still unnamed and nascent, was piloted in Dallas.

"Discounts (alone) are not going to make communities more resilient. We've got to incentivize developers. We've got to incentivize those that are selling property, those that are financing property, those that are providing utilities – all of the players and the government," he said.

Similarities between roof fortification in Alabama to Dallas made the Texas city a good place to experiment with Triple-I's concept. However, the organization is still in need of partners and funding to bring the program to fruition.

The key will be to get enough financing to "scale it and repeat it," Kevelighan, who is speaking with at least two other communities about experimenting with the program, said.

In an insurance industry trying to use data and emerging technologies to mitigate the climate-related losses that have racked up in recent years, Kevelighan said the next step will be integrating "resilience into the business."

"When you build resilience into your business strategy, that's where innovation and tech companies and entrepreneurs can come into play to help incentivize the business case," he said.

Until now, the norm in the insurance industry has been to rely on private endowments or foundations to push for resilience building.

"But (slowly), you are seeing some insurers build it into their business through (measures like) risk engineering, where some companies have hundreds dedicated to it, so a shift is happening," he said.

Kevelighan expects the Triple-I program to launch more formally in the coming months.