Traditional insurance models are no longer fit for today’s fast-evolving landscape. Mounting costs, outdated systems, and shifting customer expectations demand a bold transformation. This new research reveals why now is the time for insurers to modernize their operating models – leveraging Cloud, AI/ML, GenAI, IoT, and more – to drive efficiency, innovation, and sustainable growth. Discover how industry leaders are reimagining their foundations to stay competitive and profitable.  

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While on vacation last week at the Jersey shore, my mind wandered far afield. Perhaps because my daughters repeatedly urged me to watch "Sinners," my thinking ranged to vampires and then zombies. 

Eventually, my mental meandering resolved itself into a renewed belief in the importance of scenario planning, especially in these unpredictable times, and the insurance industry should absolutely be preparing for a whole range of possibilities.

Let's start with the one that amused me as I sat on the beach: the possibility of a zombie apocalypse. 

A key issue: Are those who get infected by the hordes of zombies dead or merely "undead"?

As I understand zombie lore, the decision could go either way. Zombies don't show any brain activity and have no heartbeat. Yet they still have their physical bodies, and they still function — in that straight-armed, "I'm coming to eat your brain" kind of way. 

Life insurers would have to come to a decision and be prepared to defend it.

If zombies are considered to be "undead," all sorts of other types of insurance kick in. Zombies decay and are known to lose limbs, so there could be lots of disability claims, for instance.

There would be auto accidents galore, as people fled. 

There might be liability claims against property owners — or not. I'm liable if someone slips and falls because of my carelessness, but am I really liable if a defense I've rigged up blows a zombie's brains out? What if my system blows out the brains of an uninfected neighbor looking for protection? 

As for health insurers, you might think they'd be inundated with claims, but there's no treatment for zombies. There would presumably be loads of people injured fleeing the zombies, but would hospitals still be functioning? What would the CPT code be for an injury while avoiding an attack by a zombie?

And on and on and on.

In the real world, where even the multiplying hordes of conspiracy theorists aren't claiming zombies exist, Royal Dutch Shell is the poster child for scenario planning. Based on research at the RAND Corporation in the 1960s, it set up a group that considered, among many other things, the possibility of a surge in oil prices. Shell then put contingency plans in place that left it well-prepared when prices quadrupled in just a few weeks during the oil crisis of 1973.  

For me, the key hurdle for scenario planning is to make sure you don't think you're predicting the future. As this article explains in some detail, based on the Shell example, you're just trying to get outside the mental model that you use to view the world. Even if none of your scenarios come to pass — and they likely won't — you've developed a more robust view of your environment and are better prepared. 

Now is a great time to apply that sort of discipline in insurance because of all the uncertainty about government policy, about geopolitics and about the economy. 

The Trump administration has for months talked about abolishing the Federal Emergency Management Agency but may be backing off after the disastrous flash flood in Texas. Tariff policies are all over the place. What's going to happen with Ukraine, Gaza, Iran...? Economists are predicting a resurgence of inflation in the U.S., and the data released today suggest it may be starting, but many of the expected effects from Trump policies have been muted this far. Will they, in fact, show up? When?

Your strategic decisions may not change much based on some of those issues, but it's worth gaming out the possibilities for any that might. 

In the meantime, stay away from those zombies.

Cheers,

Paul

The flash flooding in Texas has, tragically, killed more than 100 people, and much-deserved finger pointing has begun about who all is to blame. As responsibility gets sorted out over the coming weeks and months, I think we need to recognize another aspect of the problem, one that goes well beyond local, state and federal authorities. We humans just don't think and behave right.

The flood happened in what's known as the most dangerous river valley in the U.S., but local and state officials have for years decided not to install early warning systems because they didn't think voters would approve of the spending. Lots of people discounted the forecasts of heavy rain that the National Weather Service issued in the days leading up to the floods.

If we can't even prepare for flooding in what's known as Flash Flood Alley, where can we get it right?

I'm really quite discouraged. I'm beginning to think human behavior may be intractable.

To be clear, I'm happy to point fingers at lots of people in authority. There was a massive failure to prepare here, as this story in the Washington Post describes.

State and local authorities not only didn't invest in warning systems; they also underestimated the logistical difficulties of alerting people in remote areas, even though cellphone coverage is known to be spotty and severe weather can obviously cause power outages. At the federal level, the DOGE chainsaw led to some 600 people being cut at the National Weather Service or taking early retirement this spring, and many experts say the lack of personnel likely contributed to the inadequacy of warnings about the Texas flood. 

The problem will get worse at the federal level, too, because the Trump administration says it will scale the Federal Emergency Management Agency (FEMA) way back or even eliminate it as part of a plan to "empower states." Already, the Trump administration has said it will, at the end of this month, cut off access to a data source that is considered to be crucial for hurricane forecasting. 

But even beyond the (many) failures of authorities, I think we have to acknowledge that people really aren't built to prepare for disasters. We reason based on our personal experience, and we get complacent because we haven't experienced a flood, a wildfire, a hurricane, a tornado and so on.  

I realize money is scarce in many areas and can understand why voters would be reluctant to invest in warning systems. I also realize that this flood was unprecedented in this particular area.

But we live in a time of unprecedented weather, and the problems are only going to get worse. So we need to do far better at making ourselves and our properties more resilient in the face of impending natural disasters. 

Yet I'm not sure we will. 

I'm not sure we can, as humans.    

All I can think to do is the sort of thing I've recommended in the past, so we can at least minimized the catastrophes. Insurers have a major opportunity to guide policyholders on how to mitigate risk, including possibly offering incentives through discounts on premiums. Insurers can also help communities of people work together. 

We won't solve the problem. We humans are hard-wired against a real answer, it seems. But we can have a serious rethink and at least try to do better.

That's the best I've got, I'm afraid. 

Cheers,

Paul

Insurance fraud remains the second-most costly white-collar crime in the U.S., after tax evasion. (1) The Coalition Against Insurance Fraud reports that 78% of U.S. consumers are concerned about insurance fraud (2), most likely because they know that fraud doesn't just affect insurers; the losses are passed on to policyholders through higher premiums. The Federal Bureau of Investigation reports that insurance fraud costs an average American family $400 to $700 annually due to increased premiums to cover the expense. (3)

Meanwhile, many property and casualty (P&C) insurers are facing growing customer attrition due to recent inflation-driven policy rate hikes. (4) In this environment, continuing to raise premiums to offset fraud losses is likely not a viable strategy for long-term profitability and market share growth.

Instead, insurers can equip themselves to vanquish fraud before incidents occur. They can shift from relying on traditional fraud detection methods to investing in more advanced exposure and prevention techniques. In a recent Deloitte survey of insurance executives, 35% of respondents chose fraud detection as one of the top five areas for developing or implementing generative artificial intelligence applications over the next 12 months. (5)

Deloitte predicts that, by implementing AI-driven technologies and integrating real-time analysis from multiple modalities, P&C insurers could reduce fraudulent claims and save between $80 billion and $160 billion by 2032.

AI-fueled multimodal technologies refer to advanced systems that leverage AI to process and integrate data from multiple modalities, including text, images, audio, video, and sensor data. By analyzing diverse types of data, these technologies can generate more comprehensive and accurate insights.

Why is P&C insurance fraud detection so challenging?

An estimated 10% of P&C insurance claims are fraudulent, resulting in a $122 billion loss annually, or 40% of the total fraud losses of the insurance industry. (6) Fraud is so prevalent because typically, policyholders only interact with their insurance providers when paying premiums annually or when they need to file claims. This infrequent interaction can limit insurers' ability to continuously oversee policyholders' activities, allowing fraudulent activities to go undetected.

Fraud is typically segmented into soft and hard incidents. Soft fraud involves inflating a legitimate claim, like overstating repair costs or exaggerating an injury. Hard fraud is when premeditated actions create a false claim – for instance, if a policyholder stages an accident, commits arson or fakes a theft. Soft fraud is more common, likely because it's hard to prove; it accounts for 60% of all incidents. (7)

Mounting pressure propels demand for advanced detection tools

The onset of the COVID-19 pandemic accelerated digitization, creating both opportunities for fraudsters and a flurry of innovative solutions. (8) Fraud-detection technology has become a rapidly growing industry, estimated to multiply eight times, from $4 billion in 2023 to $32 billion by 2032. (9) Simultaneously, pressure from regulatory bodies is pushing insurers to implement fraud detection systems. (10)

How can AI help detect and prevent fraud?

AI is equipping insurers with new fraud detection models that can free human investigators to focus on more complex fraudulent cases. Combining AI-driven anti-fraud technologies with advanced data analytics enhances insurers' capabilities to detect and prevent fraud. This can be beneficial in the property claims and personal auto insurance segments due to their complexity and sheer volume of data, need for real-time processing, and potential for significant cost savings and efficiency improvements. (11)

Multiple techniques such as automated business rules, embedded AI and machine learning methods, text mining, anomaly detection, and network link analysis could score millions of claims in real time. Combining data from various modalities could help identify patterns and enhance the investigative process by reducing false positives, increasing detection rates of fraudulent claims, and saving on costs associated with fraud investigations. Such techniques must be deployed with human oversight and in alignment with the laws of each jurisdiction. AI can be used in:

• Text analytics. natural language processing analyzes textual data of claims forms, emails, and social media posts to identify keywords and entities. While claims with suspicious language or inconsistent details can be flagged for further investigation, regulations like the Colorado AI Act require AI algorithm-based models to avoid discrimination and bias when flagging risk. (12)
• Audio-image-video analysis. Speech recognition and sentiment analysis can examine customer calls for signs of duress, allowed under the European Union's AI Act on emotion inference for safety. (13) Photo analytics can uncover irregularities in metadata, manipulation, and repeated use. Causation analytics can identify if alleged injuries were likely consistent with the experienced accident. Video analytics can verify the occurrence and extent of damage, identify authenticity of images, and highlight signs of tampering or staging.
• Geospatial analysis. Satellite images and comprehensive 3D drone footage can verify the extent and location of damage that may not be clearly visible in physical inspections. This could also reduce the risk of personal injury to claims personnel, especially at natural disaster sites.
• Internet of Things data. Real-time surveillance devices like vehicle telematics can reconstruct accidents and verify the legitimacy of claims. Smart home sensors like water leak detectors and security cameras can help gather evidence that can be used to verify claims and detect fraudulent or staged activities.
• Simulation models. Replicating the behavior of medical providers, repair shops, and others that individuals may work with under different scenarios in a controlled virtual environment can identify patterns and deviations from standard industry practices and detect instances such as overbilling, unnecessary services, and coordinated activities or probable collision rings between entities.

Combining AI and human foresight could be the way forward

Over the past two decades, insurers have established special investigative units to detect and mitigate fraud. Looking ahead, anti-fraud leaders face several challenges. Insurers that pair sophisticated technology with human enablement could potentially save billions of dollars for policyholders. Attracting and retaining skilled talent, along with continued support for automation, will likely also be important for companies as they look to achieve their long-term anti-fraud goals.

Endnotes

1. Defined as intentional deception in the insurance process, from policy purchase to claims settlement; Ashley Kilroy, "Insurance fraud statistics 2025," Forbes, January 3, 2025.

2. Kilroy, "Insurance fraud statistics 2025."

3. National Insurance Crime Bureau (NICB), "NICB and Agero join forces to combat insurance fraud," press release, June 12, 2024.

4. Kelly Cusick, Michelle Canaan, and Namrata Sharma, "Bridging insurance gaps to prepare homeowners for emerging climate change risks," Deloitte Insights, May 2, 2024.

5. Sandee Suhrada, Stephen Casaceli, and Dishank Jain, "Are insurers truly ready to scale gen AI?" Deloitte Insights, April 4, 2025.

6. Covers fraud from property, auto, and workers compensation; Kilroy, "Insurance fraud statistics 2025"; Deloitte Center for Financial Services analysis.

7. Discussion with Kedar Kamalapurkar, Deloitte insurance claims leader, December 13, 2023; Deloitte Center for Financial Services analysis.

8. Satish Lalchand et al., "Generative AI is expected to magnify the risk of deepfakes and other fraud in banking," Deloitte Insights, May 29, 2024.

9. Global Market Insights (GMI), Insurance fraud detection market size, May 2024; Amanda Paule, "Insurance companies are betting on AI and mass data analytics in a battle against fraud that costs billions," Business Insider, October 24, 2023.

10. Joe Desantis et al., "2025 insurance regulatory outlook," Deloitte Insights, February 21, 2025.

11. Kilroy, "Insurance fraud statistics 2025."

12. Tatiana Rice, Keir Lamont, and Jordan Francis, "The Colorado Artificial Intelligence Act," FPF US Legislation Policy Brief, July 2024.

13. European Commission, "AI Act enters into force," Aug. 1, 2024.

Summer has long been the season of transition. It's when families relocate, leases turn over, and homeowners settle into new properties before the school year begins. In fact, nearly 45% of U.S. home moves occur between May and August. For insurance professionals, this seasonal surge in home transitions presents a prime opportunity, not just to update policies but to initiate deeper conversations about financial protection and preparedness.

And this discussion is well timed as summer brings new beginnings and the peak of many natural disasters. Wildfires, hurricanes, severe storms, and tornadoes are all active perils during these months. All too often, clients stepping into a new home are doing so without a clear plan for how they would weather the financial aftermath of a catastrophe that may hit their property.

The recent frequency and severity of natural disasters have made one thing clear: Having a policy isn't the same as being prepared. In today's volatile climate, insurance professionals must act as financial resilience advisors, helping clients build layered protection plans that go beyond traditional coverage and prepare them for the full financial impact of disaster. This shift in mindset doesn't just benefit clients, it elevates the agent-client relationship and positions agents as long-term partners in their financial wellbeing.

Start With the Emergency Savings Conversation

According to a 2024 Empower Research report, 37% of Americans can't cover a $400 emergency. Yet a wildfire evacuation or storm displacement can cost thousands in temporary housing, lost wages, and everyday essentials. When disaster strikes, it's rarely just a $400 problem, and the financial shock often hits long before an insurance claim can be processed.

When clients are moving into a new home or renewing their policy, encourage them to evaluate their emergency savings with this simple question: If a disaster hit tomorrow and you couldn't return home or work for two to three weeks or more, how would you manage your expenses?

This can prompt clients to reassess their emergency savings and rethink how they've structured their coverage. It's a gateway to a more meaningful discussion about true financial readiness and matching them with insurance solutions to fit their needs and their environment.

Match Coverage to Risk and Lifestyle

Every client has a unique risk profile, and their coverage combination should reflect this. Encourage clients to consider their:

• Geographic Risk: Is their area prone to hurricanes, wildfires, or earthquakes?
• Household Makeup: Do they have dependents, seniors, or pets to consider for evacuation or temporary care planning?
• Income Stability: Could they afford to miss a paycheck, or two, without dipping into long-term savings?

Using tools like FEMA disaster data and regional risk maps can ground these conversations in facts. Between 2013 and 2023, nearly 89% of all U.S. counties declared a natural disaster. Clients need to understand: No region is immune, and the financial fallout of disaster is real.

Identify the Gaps in Traditional Coverage

Many clients assume their homeowners policy has them covered and underestimate their financial vulnerability. This creates a valuable opportunity to educate them on where those policies fall short and how those gaps could affect their recovery process.

Here are a few common misconceptions to address:

• "I'm covered for earthquakes and floods." Earthquake and flood damage are not typically covered under standard homeowners or renters policies, which many clients aren't aware of until it's too late.
• "I'll file a claim and get help right away." Clients may not realize that after a large-scale disaster, insurance claims can take weeks, even months, to process.
• "I won't have to pay much out of pocket." Many homeowners underestimate how expensive their insurance deductible can be, especially with high-deductible plans that help lower premiums. After a loss, some are surprised to learn they need to pay thousands up front before coverage kicks in.

This is where supplemental disaster insurance can fill critical gaps in traditional policies. A solution like Recoop Disaster Insurance offers up to $25,000 in flexible, lump-sum payouts within days, not weeks, for a variety of perils. These funds can be used for whatever matters most in the moment: temporary housing, pet boarding, medical expenses, keeping up with the bills or covering insurance deductibles. Supplemental coverage isn't just a nice-to-have; it's a practical, affordable way to protect finances when disaster strikes.

Advocate for a Layered Protection Plan

The most resilient financial plans are layered with: 1) emergency savings for immediate needs, 2) traditional insurance to protect structures and belongings, and 3) supplemental coverage to provide cash flow support during the critical interim period. Together, these elements can help clients avoid high-interest debt, protect long-term savings, and stay financially afloat when the unthinkable happens.

The Bottom Line for Agents

Helping clients navigate this broader landscape of risk management is a brand differentiator. By bringing these conversations to the forefront, especially during seasonal inflection points like summer moves, you demonstrate a deep commitment to your clients.

You're not just writing policies; you're building relationships based on trust and foresight. That positions you as an indispensable advisor and earns the kind of loyalty that lasts well beyond the policy renewal.

The months ahead will bring more storms, heat waves, and wildfires. With more Americans on the move this summer, there's no better time to have these conversations and help clients disaster-proof their finances. The next disaster may be unpredictable, but your clients' financial preparedness doesn't have to be.

The  2025 Los Angeles County wildfires were among the worst natural disasters in American history. California isn't a stranger to these events. However, even the nation's richest state couldn't prepare for the scale of devastation caused by the Palisades, Eaton, and Hughes fires that erupted in roughly two weeks, engulfing tens of thousands of acres in flames and displacing thousands of families.

Although these devastating blazes reached 100% containment over three weeks after they began, they've made headlines again midyear. USAA, AAA, and State Farm policyholders have sued their insurers for alleged underinsurance, igniting a firestorm of controversy.

Policyholders Walk on Hot Coals

According to an estimate from the Los Angeles County Economic Development, these wildfires caused between $28 billion and $53.8 billion of property damage. The Palisades and Eaton fires accounted for most of the destruction. These incidents collectively incinerated 11,665 multifamily buildings, single-family residences, and motor and mobile homes, razing neighborhoods of multimillion-dollar properties to the ground.

The disruption and distress of Los Angeles wildfire survivors are unfathomable. California Gov. Gavin Newsom has made swift recovery a top priority. By the end of January, insurance companies had released $4.2 billion to partially pay 14,417 out of 31,210 claims filed by affected property owners.

Under a consumer protection law that Insurance Commissioner Ricardo Lara sponsored in 2020, insured individuals were entitled to receive advance funds worth at least 30% of their homeowners insurance policy's dwelling limit. They could also receive up to $250,000 for replacing personal property or contents in a total loss after a disaster without submitting an itemized claim.

In early February, Commissioner Lara requested insurers pay affected wildfire victims at least 75% of their contents coverage limits without requiring a detailed inventory of their personal property. Some insurance companies didn't answer the call and suffered no legal repercussions. Still, the California Department of Insurance (CDI) named them when it publicized the lists of insurers that agreed and those that said no.

The advance payments many distressed policyholders received could mitigate the gravity of the situation. Ultimately, the cleanup speed determines how soon homeowners can rebuild what they lost and return to normalcy.

Federal disaster officials initially estimated that it could take 18 months to remove all the debris from the burned areas. President Trump ordered an accelerated process in late January, causing the cleanup procedure to progress months ahead of schedule.

As of the third week of June, phase 2 of the cleanup had been about 66% complete. Los Angeles County had received 77 temporary housing applications, approved 33 and reported four completed. Regarding rebuilds, the county had received 946 applications and issued 44 building permits, and most were in the zoning or building plan review stage.

Premium Increases Fan the Flames

Despite the government's effort to speed the cleanup process, many wildfire victims think quick recovery is far-fetched. The ordeal of hundreds of State Farm and FAIR Plan customers continues after they experience claim delays, disputes and dismissals. Their horror stories include getting denied for services needed to verify contaminants in their properties, receiving late compensation for temporary lodging expenses and dealing with unhelpful adjusters.

After enduring these setbacks, the policyholders received more bad news when Commissioner Lara granted State Farm's request for a 17% emergency rate increase statewide in the second week of May. An administrative judge endorsed the increase to help replenish the company's capital after the wildfires, arguing that it was fair and in the best interest of consumers.

Commissioner Lara was confident in his decision, saying he expects the company to justify its financial condition after the rate increase and provide a recovery plan before an impartial judge and members of the CDI.

The rate approval didn't sit well with distressed policyholders, who have been widely dissatisfied with how State Farm has handled their claims. The timing added insult to injury, as the state's insurance regulator swiftly approved the request before investigating the reports of the insurer's illegal delays, low-ball offers and denials.

Providing incentives to a high-profile insurer that has come under fire for serving its customers poorly with the green light to charge higher premiums would naturally leave a bad taste in many people's mouths. The move has enraged many wildfire survivors who feel State Farm's coffers should be adequate for such a crisis after the company unfailingly collected premiums.

Insurance Commissioner Fights Fire With Water

In mid-June, Commissioner Lara launched an official investigation into State Farm's alleged failures to fulfill its legal obligations to customers in handling the claims of Los Angeles wildfire victims. The review aims to determine whether the company complied with California's consumer protection and claim-handling laws. The wildfire survivors view this development as a critical step toward accountability, although it wouldn't be surprising if some are cautiously optimistic.

The commission has a history of accommodating insurance companies' needs to discourage them from leaving the state over fears of massive losses due to intensifying natural disasters.

In 2023, California's chief insurance regulator assured insurers that the state would allow them to consider future climate risks when determining rates, agreeing with the notion that the past was no longer the reliable predictor of the future it used to be. This privilege is available only to the insurance companies that write new policies for homeowners in locations with the most risk.

Although the rule change had merits, Consumer Watchdog founder Harvey Rosenfield sounded the alarm, stating that the announcement could raise homeowners' and renters' insurance premiums by hundreds or thousands of dollars.

The commissioner countered critics by highlighting that customers who embrace climate resilience could enjoy lower premiums. Property owners can apply for grants worth $100,000 to $5 million to fund projects to mitigate the effects of extreme heat, which can subsequently reduce wildfire risk.

Some Insurers Are in Hot Water

The underwhelming claim services frustrated many wildfire survivors, but the discovery of gross underinsurance lit a fire under them.

In early June, a press release by the Newport Beach, California-based law firm Bentley & More revealed that a group of homeowners affected by the Palisades and Eaton fires filed lawsuits against USAA and AAA alleging widespread fraud, negligence and bad faith. The plaintiffs accused the companies of routinely underinsuring policyholders by at least 50% of the rebuilding costs by using flawed estimating software.

The complainants added that the home insurance providers had prevented them from buying additional protection, claiming their coverage was sufficient. The aggrieved parties say their insurers had required them to pay thousands of dollars upfront before getting compensated.

The complaint states that the CDI has already flagged USAA for pervasive underinsurance through a targeted market conduct examination. The department said the insurer needs to make millions of additional payments to insureds to correct the situation.

The most common trigger for a market conduct exam is the frequency of complaints. The CDI must have reviewed USAA more closely after receiving too many claims of it engaging in this unfair business practice. The commissioner could impose an administrative penalty of up to $300,000 for each California Insurance Code violation and suspend or revoke the insurer's license.

Another group of wildfire survivors has taken legal action against State Farm alleging systematic underinsurance. One complainant says their dwelling limit was $2 million below the estimated amount to rebuild their property.

Before these lawsuits, some California homeowners had accused many major insurance industry players of collusion. In April, the wildfire victims sued 25 large insurers, allegint they were involved in an illegal scheme designed to force homeowners onto the FAIR Plan, violating the state's antitrust and unfair competition laws.

The plaintiffs connected the dots when dozens of insurance providers suddenly and simultaneously stopped offering coverage or writing new policies in fire-prone areas in 2023. The decision left countless homeowners with no choice but to use California's insurance plan of last resort. This alleged conspiracy caused homeowners to be underinsured while reducing the financial responsibility of home insurance companies in the state, the plaintiffs say.

The state's attorney general enforces California's antitrust laws civilly and criminally through investigations of potential violations and litigation. A guilty individual may go to prison, while an erring business may be liable for several times the amount of victims' financial injury.

Navigating the Dangers of Wildfire Risk

Only time will tell how these cases unfold. Regardless of how the accused parties decide to defend themselves and minimize reputational damage, the insurance industry should learn from these events to better manage wildfire claims in the future.

The threat of a hurricane or an earthquake is enough to make anyone tremble. Fear around these catastrophes reverberates far beyond the insurance world, where they have been officially dubbed "primary perils."

Hurricanes and earthquakes earned this "primary" distinction because, for the longest time, they posed the greatest risk to carrier solvency. There was so much concern around hurricanes and earthquakes that the science of catastrophe risk modeling began with the desire to understand and quantify their risks.

In thinking we were tackling the "primary problems," so much of the industry has overlooked the cumulative, material impact of "secondary perils." Secondary events like wildfires and severe convective storms have gained momentum in our blind spots and now pose equal threat to insurance operations.

It all raises the question: Is this "primary/secondary" distinction still relevant, or perhaps even dangerous, in today's environment?

Removing this distinction, both in concept and in practice, will give insurers more solid footing to overcome the insurance crisis.

The insurance community must eradicate the outdated peril hierarchy not only internally, but also for property owners, who may not realize their inherent peril bias as they make decisions around how to protect the places they call home.

Tear away the tiers

In terms of destruction, "secondary perils" have, since the mid- to late 2010s, usurped hurricanes and earthquakes.

In 2023, hail and tornadoes stemming from severe convective storms caused more insured losses than any hurricane during the 2023 season. Floods are also among the deadliest, most destructive perils.

In 2025 to date, wildfires (not yet technically considered a "primary peril") have outdone all natural catastrophes, with the Los Angeles blazes alone causing up to $45 billion in insured losses.

Clearly, there's nothing "secondary" about hail, tornadoes, floods, or wildfires.

Here's how we get all perils, and everyone, on the same page to protect insurers everywhere in their ability to reinforce communities:

Build an arsenal of resources to evaluate all perils

To nurture a realistic view of risk in today's environment, carriers need a full stack of resources to address every peril — including advanced catastrophe risk models for "secondary perils" that align with real-life scenarios. It's no longer enough to prioritize the biggest catastrophes; an effective risk management strategy involves looking at the potential magnitude of every kind of weather event.

Given that the nature of storms and other disasters changes each year and season, companies can protect their ability to succeed with sophisticated, high-fidelity, probabilistic risk models that simulate hundreds of thousands of years of potential events.

Working with risk modeling solution providers that regularly recalibrate their systems to adapt to a constantly changing environment is an investment that will deliver. When evaluating high-frequency events like severe convective storms, insurers need digital tools that reflect real-time conditions.

Understand when natural perils are amplified by the unnatural

It's not just about leveraging a full spectrum of risk models; it is also imperative to grasp why certain perils are posing increasingly significant threats to the insurance system. Understanding the nuances is how we get to the heart of risk that would otherwise be hard to quantify.

All perils are changing, and it's not always due to an unpredictable environment. We can no longer afford to ignore the myriad of components that are fueling emerging perils (literally).

One of the reasons why wildfires have led to more significant losses, and have thus become harder to insure against, is that they are increasingly becoming conflagrations. While wildfires are typically blazes that start in the wildlands and are largely fueled by natural vegetation, wildfire-induced conflagrations occur when these fires reach the built environment. When fed by man-made building materials, wildfire-induced conflagrations can burn down communities in just hours. This is what happened to the Pacific Palisades and Altadena neighborhoods during the monumental Los Angeles wildfires earlier this year.

The growing fallout from severe convective storms also has a human dimension. Since the global pandemic lifted the need for many workers to be physically present in corporate offices, large numbers of people have moved to storm-prone states in Tornado Alley, including Texas. As the built environment has become denser, the potential for insured losses has increased. This played into the impacts of the 2024 season, when Texas experienced unprecedented damage.

With all tll this in mind, digital tools can enhance your risk management strategy by  distinguishing man-made risks from traditional hazard risks.

Educate your consumers

Issuing policies doesn't have to be purely transactional; it can be educational, too.

To fully support their policyholders and build resilience in a world that seems to play peril roulette, carriers can educate consumers about the far-reaching impact of all weather events — both perils that can cause incredible damage in one fell swoop and the high-frequency events that cause compounded destruction.

Keeping prospects and policyholders informed about their options for adequate coverage builds invaluable risk literacy. This type of outreach doesn't have to be complicated, either; simple marketing campaigns or a slight reframing to embrace informative customer service will go a long way.

Many property owners are underinsured, particularly for floods, which can lead to significant out-of-pocket costs. By sharing insights gleaned from models and internal experts and encouraging policyholders to review their coverage on an annual basis, carriers can empower their policyholders to make more informed insurance decisions.

Severe convective storms are now affecting more areas, and with greater intensity, so it's crucial to educate more property owners about these perils and their new paths of destruction.

Risk literacy can also help protect more people from the impacts of wildfires. Those living distant from the wilderness-urban interface (WUI) may not realize they still could face significant burn potential from conflagrations.

Risk savviness drives more mitigation, which is key to building resilience within communities. When homeowners fortify their homes against the disasters most likely to strike them, they limit the impact even the worst catastrophes can have—not just on their own property but across their neighborhoods. Mitigation is contagious, too, helping insurers broaden their risk appetite in communities that may need protection the most.

Dive deeper; don't drown in risk

Weather events that once seemed immaterial have now become significant perils in their own right. With the insurance crisis in full swing, it's time to bring disasters like hail events, tornadoes, windstorms, floods, wildfires, and other emerging catastrophes into sharper focus.

We don't have to take blows from this crisis lying down. Instead, let's reinforce our risk management and underwriting functions with a full arsenal of risk modeling solutions. From there, we can amplify the resilience of communities everywhere.

The frequency, severity and geographic occurrence of wildfires have increased significantly in recent years, fueled by climate change, human activities, and evolving land use patterns. The rapid spread poses substantial risks across various sectors and regions around the globe, as highlighted in the new Emerging Risk Trend Talk report from Allianz Commercial.

As the devastating Los Angeles wildfires in January 2025 showed, the western U.S., along with western Canada, southern and eastern Australia, and southern Europe are some of the geographical zones most exposed to wildfires. However, such fires are also now occurring in locations not previously regarded as being at significant risk, including forests in northern regions of Canada, Scandinavia, and Russia. South Korea even suffered the deadliest wildfire outbreak in its history during March and April 2023.

Wildfire seasons are starting earlier and lasting longer, which affects the ability to share firefighting resources within regions. Catastrophic wildfires are becoming larger and more frequent. The impacts of the worst wildfires in terms of property damage and fatalities in the last decade alone have been significantly greater than for at least 50 to 100 years in some regions.

Climate change is elevating risks by increasing fuel loads, drying fuels, strengthening winds, boosting lightning activity, and promoting invasive, and more flammable, species. The 10 warmest years since 1850 have all occurred in the past decade (2015-2024), with 2022 being the hottest on record.

Wildfire exposures are also being intensified by changing land use, in particular in the "wildland urban interface," or WUI – locations where human development is expanding into areas of wildland vegetation prone to fires. The number of people and property exposed to wildfires is increasing. This exposure coincides with increased lengths of electricity lines and roadways – both key ignition sources. Global insured losses from wildfires increased from $8.7 billion in the 2000s to $56.3 billion in the 2010s, becoming more than six times more expensive.

Any sector can be affected by wildfire, but utilities and energy, real estate and construction, and agriculture and transportation are among the sectors that face the most significant exposures to damage and business interruption. Regulatory challenges and litigation related to wildfire liabilities are also on the rise, necessitating robust risk management strategies.

Strategies include creating defensible spaces, managing vegetation and using non-combustible building materials. Fire suppression and protection strategies are also evolving, and companies need to keep up with them. Developing and implementing an effective wildfire preparedness and business continuity program, and regularly reviewing and updating it, is recommended.

There is also a range of increasingly sophisticated technical tools and innovations that can be used to model and mitigate fire risk. Examples include seasonal forecasting, drone surveys, geographical information system (GIS) mapping, thermal imaging, vegetation management systems and artificial intelligence camera monitoring systems.

Ultimately, wildfire mitigation calls for a multi-faceted approach, including individual companies' compliance with all relevant laws and regulations concerning fire safety. More broadly, preparing for wildfire will require mitigating greenhouse gas emissions, adapting to changing environmental conditions, and implementing effective wildfire management strategies. This might involve a combination of land use planning to minimize exposure to wildfire risk, and investments in those technologies that enhance fire detection, prediction, and suppression.

Mitigating wildfires is a complex and pressing issue that requires coordinated action at local, national, and global levels to minimize risks and build resilience in the face of a changing climate.

To read the Allianz Commercial report, visit: ARC-Emerging-Risk-Trend-Wildfires.pdf

Today's consumers expect seamless, convenient, and secure experiences in all their digital interactions. They have become accustomed to online shopping carts and one-click payments, and they want the same experience for their insurance premiums. Unfortunately, insurance premiums have historically been the opposite of this. Paying with a check or cash requires multiple steps for insureds and takes too much time. Insureds don't want another chore; they want to click "pay" and move on with their day.

Digital interactions are becoming the norm in most other industries, and keeping up with these consumer preferences is key to agencies winning and retaining clients. Luckily, the insurance industry has started embracing payment solutions. 

While some agencies may have reservations about these platforms, perhaps due to security concerns or integration issues, adopting a digital payment solution can significantly improve your customer experience in several ways. Let's look at a few of the ways these platforms can alleviate your concerns and provide the best possible service to your clients.

Flexing Your Payment Options

One of the primary benefits of digital payments is the unparalleled convenience they offer policyholders. A digital payment hub provides 24/7 access, allowing your clients to pay their bills whenever it is most convenient for them. Whether they prefer to pay via mobile, web, or text, they can do so from anywhere and on any device. Unlike checks and large sums of cash, which are not convenient and require extra steps for customers, digital payments offer various methods, including credit cards, Automated Clearing House (ACH), and digital wallets. Insureds can pay with whichever method works best for them.

Taking convenience one step further, digital payment solutions allow your agents to create customizable payment plans for their clients. Policyholders can pay individual or multiple invoices simultaneously, choose which invoices to pay, and make partial payments. They can even turn on recurring payments so they don't have to worry about missing a payment.

Unlocking Financing

Digital payment solutions offer convenience beyond flexible payment options. Premium financing can be embedded directly within the solution, making it easier than ever for agencies to offer financing options. This is especially helpful for businesses that find premiums accounting for a substantial portion of their overhead costs and need to choose a less expensive policy that doesn't offer adequate protection because it better fits their budget.

Easy financing options might not be readily available at other agencies that stick to traditional methods. Using a digital payment solution with embedded premium financing helps your clients get better coverage than they could if they had to pay in one lump sum. Offering embedded premium financing can make your agency stand out from the crowd, providing something your clients can't easily get elsewhere.

Providing Peace of Mind

Just as checks and cash lack convenience, they also lack security. Paper checks and cash left in desk drawers are not secure, and having personal information exposed could lead to security risks. There is also the potential for human error during counting and reconciliation. Insureds are increasingly looking for more secure ways to make payments. They don't want their personal information compromised and definitely do not want to deal with the consequences of it being leaked.

Digital payments are safer. They help eliminate the physical counting and manual data entry process, which can reduce errors and omissions (E&O) risks. Digital payment solutions allow your agency to tailor security settings and user permissions to your internal structure, ensuring each user only has visibility into the accounts and payments relevant to their role. Payments are automatically applied, and activities are synced and tracked, supporting appropriate auditing and compliance requirements.

Integrating the payment hub with your customer portal enhances the experience by providing transparency. Clients can log in to easily view their billing and payment history, check if payments have been received and cleared, and access all their documents. This high level of security and transparency offers your clients peace of mind, alleviating worries about identity theft or lost funds.

Streamlining Your Operations

Beyond the direct benefits for policyholders, digital payment solutions also significantly streamline the payment collection and reconciliation processes for your staff. Integrating them directly into your agency management system (AMS) makes invoicing easier and reduces internal workloads, allowing staff to send invoices with the click of a button or a simple URL and automating portions of the accounts receivable process.

Reconciling financial transactions with carrier commission and payable statements to ultimately balance the books, pay producers, and make money for the business is incredibly time-consuming and resource-intensive for agency finance teams. Digital payments, coupled with modern tools, make this process much more efficient. AI-powered applications can be used to extract data from direct or agency bill statements in various formats, simplifying the matching and reconciliation to policies and plans in your AMS. This streamlined process frees your staff to focus on higher-value tasks that enhance the customer experience.

Standing Out From the Crowd

Many agencies may believe their clients are content with writing premium checks and might not see the need for a modern, online checkout experience. However, consumer expectations are changing. Today's insureds demand choice and expect the kind of simple, quick online payment experiences they are accustomed to on platforms like Amazon and Chewy.

By offering a digital payment experience that includes convenient, flexible payment options, embedded premium financing, enhanced security, and transparency, you can differentiate your business from your competitors. Adopting digital payments is not just about processing transactions; it's about elevatng the customer experience and becoming a better business partner for your clients.

The lines between personal and professional lives have never been more blurred, and for today's executives, this convergence has transformed their homes into the new battleground for sophisticated cyberattacks. This isn't just about individual privacy; it's about a vicious cycle where personal digital vulnerabilities are directly exploited to compromise corporate defenses, leading to devastating financial, reputational, and operational consequences.

The latest Digital Executive Protection Report 2025 from the Ponemon Institute and BlackCloak sheds light on this escalating crisis, underscoring the urgent need for a comprehensive digital executive protection (DEP) strategy.

The Escalating Threat: Executives Are In the Crosshairs

The report, based on insights from nearly 600 IT and security professionals, confirms what our security professionals see firsthand: Attacks on business leaders are not only increasing but also accelerating and becoming more difficult to detect. According to the report, 51% of respondents reported attacks on their organization's business leaders in 2025, up from 43% in 2023. This upswing underscores that business executives are high-value targets. Their strategic decision-making authority and access to sensitive corporate data and intellectual property make them prime entry points for threat actors seeking to bypass hardened enterprise networks.

One of the most insidious threats highlighted is the rise of deepfake impersonation attacks. The report reveals that these highly deceptive attacks targeting executives have increased from 34% of respondents in 2023 to 41% in 2025. These attacks enable malicious actors to impersonate trusted colleagues or authority figures, tricking executives into disclosing confidential information or authorizing fraudulent transactions. The financial and psychological impact of such attacks can be significant, as is the growing fear that digital attacks could escalate into physical harm, with 50% of respondents anticipating such threats and 63% now offering self-defense training.

The Vicious Cycle: Personal Vulnerabilities and Enterprise Fallout

The core of the executive risk cycle lies in the exploitation of executives' personal digital lives as a backdoor into the corporation. Traditional cybersecurity often ends at the corporate firewall, leaving business leaders' home networks and personal devices as unprotected extensions of the enterprise attack surface. The Ponemon/BlackCloak survey findings since 2023 show a continuing rise in cyberattacks that specifically exploit vulnerabilities in executives' homes. Disturbingly, theft of intellectual property and breaches of home networks have risen to become the second- and third-most common impacts of attacks on executives in 2025, a significant shift from two years ago, when erosion of business relationships and regulatory non-compliance were the primary concerns after financial loss.

This shift highlights a new reality: Executives, many of whom work remotely, often use unprotected personal devices or insecure home networks, unknowingly creating vulnerabilities for their organizations. Our experience with new clients reveals that 39% of executives have devices that have already been hacked without their knowledge, causing privacy, financial, and safety concerns for themselves, their families, and the organizations they represent. Furthermore, 20% of new clients have unmonitored, open-access home networks, leaving their smart home cameras, automation systems, and IoT devices exposed to malicious actors. This means that at least one in five executives inadvertently represents a significant vulnerability to their organization.

The Dangerous Gap: Why Traditional Security Falls Short

Despite the recognized risks and the clear evidence from reports such as the recent findings from Ponemon and BlackCloak, organizations are slow to adapt. Only 48% of organizations currently incorporate digital executive protection into their security strategies, a marginal increase from 42% in 2023. This gap is exacerbated by insufficient training and limited visibility into the digital lives of executives outside the corporate perimeter. While 62% of security professionals believe their executives will likely be targeted, only 43% provide training on how to secure personal digital assets, and a mere 38% offer such training only after an attack has occurred. Even as deepfake attacks climb, just 50% of respondents have plans to train their executives to recognize such a threat.

Breaking the Cycle With Digital Executive Protection

To effectively combat these escalating risks and defend the new battleground – executives' homes and their personal digital lives – companies must adopt a comprehensive approach. 

DEP is designed to safeguard executives and their families in their personal lives, thereby protecting the company itself from devastating online threats. Effective DEP requires continuing monitoring, proactive management, and swift response across several critical areas of executives' and their families' personal digital lives:

1. Privacy Management: This involves scrubbing personal information from public databases, people-search websites, and data brokers, even extending to real estate records. Executives should adopt alias email addresses and masked phone numbers for all non-critical communications and online activities. These measures significantly reduce the publicly available personal data that threat actors can leverage for phishing, doxing, and sophisticated social engineering attacks.
2. Identity Theft Protection: This includes continuous vigilance over Social Security numbers, credit profiles, and other personally identifiable information (PII), coupled with dark web monitoring to detect early signs of compromise. Should suspicious activity surface, immediate response mechanisms – such as rapid credit freezes, fraud alerts, and regulatory reporting – are deployed to limit damage and restore control.
3. Financial Protection: This involves integrating advanced fraud detection tools across all personal accounts, automating credit freezes, and establishing precise incident response protocols. If a fraudulent credit line is opened, for example, the DEP team must immediately freeze credit, file official fraud alerts, and notify law enforcement and financial institutions, prioritizing speed and precision to mitigate financial impact.
4. Family Protection: Often the most overlooked vulnerability, family members – particularly teenagers and non-technical spouses – can inadvertently create exploitable backdoors into the executive's broader digital environment. Therefore, it's essential that family members are enrolled in identity monitoring, equipped with hardened devices, and thoroughly trained on critical cybersecurity practices like phishing awareness, safe browsing, and strong password hygiene.
5. Personal Device Hardening: Executives' personal phones, laptops, and tablets must be fortified with enterprise-grade security measures. This includes systematically disabling unused features, enforcing robust encryption, meticulously managing app permissions, and regularly scanning for malware.
6. Cybersecurity and Malware Protection: A comprehensive approach demands robust endpoint protection, encrypted storage, and regular security audits across all personal and family devices. Regular penetration tests and adherence to patching schedules are vital for maintaining a strong security posture. Additionally, sensitive tasks should always be conducted within secure, isolated environments to prevent cross-contamination or data leakage.

Other important areas of DEP can include: home network hardening, IoT monitoring and detection, deepfake protection, and physical-digital integration.

The era of securing just the corporate network is over. The vicious cycle of executive risk, fueled by rising attacks on personal digital lives, demands a paradigm shift in cybersecurity. By investing in comprehensive digital executive protection, organizations can transform their most valuable assets – their leaders and their families – from potential entry points into an impenetrable first line of defense, safeguarding not just data but reputations, finances, and the future of the enterprise.