Extreme Weather Tops Business Risks as Billion-Dollar Disasters Triple

This post examines how the insurance industry is adapting to a rising tide of complex catastrophic and emerging risks. Leading carriers like Nationwide are doubling down on specialization.

Drawing on insights from Nationwide Senior Vice President Dawn Brost, we explain why generalist approaches are losing ground. Geographic and sector expertise are becoming mission-critical, and insurers and brokers need practical steps to manage exposures in today’s volatile risk landscape.

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Specialization is the new imperative

The era of relying on broad, one-size-fits-all underwriting is fading. Losses from cyber incidents, climate-driven catastrophes, and social inflation are increasing in frequency and severity.

Insurers must now target capacity and talent to specific risks, jurisdictions, and client needs. Large undifferentiated blocks of capacity are no longer effective.

What’s driving the shift

Several intersecting trends are forcing insurers to re-think how they underwrite and price risk. These trends create a landscape where local nuance and subject-matter mastery matter more than ever.

Key drivers include:

Cyber threats: Attacks are more frequent, technical, and costly, requiring dedicated cyber expertise rather than a generic IT endorsement.

Climate change and wildfires: Changing weather patterns and wildfire behavior are reshaping exposure profiles across regions, demanding granular modeling and local mitigation strategies.

Geographic variation: Regulatory frameworks, litigation climates, and social sentiments vary widely by state and even by county — for instance, California’s north vs. south, Texas county differences, and Florida’s post-tort-reform landscape.

Social inflation and evolving liabilities: Issues such as human trafficking, homelessness, and state-specific labor and liquor laws complicate casualty and specialty lines underwriting.

Practical steps for insurers and brokers

Insurers should shift from volume-focused strategies to capabilities-focused strategies. This means hiring specialists, refining underwriting guidelines, and forming deeper local partnerships with brokers who understand jurisdictional nuances.

Precision in risk selection, pricing, and capacity allocation is now a competitive advantage.

How Nationwide is adapting

Nationwide’s approach offers a useful case study. Under Dawn Brost’s leadership, the company has embedded specialization across underwriting, claims, and actuarial teams.

The company has also added local broker partnerships to navigate patchwork regulations and liability exposures.

Concrete tactics include:

Prioritizing sector- and region-specific hires rather than attempting to stretch generalist talent into unfamiliar territories.

Partnering only with brokers who bring deep local market intelligence — vital in states with nuanced labor, liquor, or tort environments.

Refusing to enter sectors where internal expertise is insufficient, thereby avoiding mispriced risk and poor loss outcomes.

Looking forward: talent, data and tech

The future belongs to organizations that combine deep human expertise with advanced analytics and AI. This combination will amplify decision-making and help keep pace with evolving exposures.

Combining human expertise with AI

Data science and AI can accelerate risk segmentation, scenario testing, and claims triage. These tools must be guided by subject-matter experts who understand local exposures and causal mechanisms.

Nationwide emphasizes this hybrid model. Specialized teams are informed by robust analytics platforms.

For brokers and insurers, the practical takeaway is clear: build specialized talent pools and deepen local market partnerships.

Deploy data-driven tools that enhance — not replace — expert judgment.

Here is the source article for this story: Extreme Weather Emerges as Top Business Risk, With Billion-Dollar Disasters More Than Tripling in Five Years