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Building Resilience: Why Business Leaders Should Pay Attention to Climate Risk
Insurance and climate events: A Washington State Perspective
Written by: Suzanne Lee and Julia Potapoff, contributing writers, Foster School of Business
As climate-related events escalate in frequency and severity, the financial systems supporting business continuity, particularly insurance, are under growing strain. At a recent forum hosted by the UW Climate Risk Lab and the Foster School of Business, leaders from Amazon, PEMCO Insurance, Russell Investments, and the Washington State Office of the Insurance Commissioner gathered to examine a critical question:
How can insurers, homeowners, and regulators work together to grow markets and protect communities?
Washington State Insurance Commissioner Patty Kuderer provided the keynote for the event. She issued a call to action to Washington state decision-makers at a “pivotal moment in our nation’s history” and highlighted the urgent need for cross-sector partnerships to include diverse communities and represent all parties in a joined-up effort to secure our economy in the face of more extreme, costly weather-related impacts.
Two key takeaways emerged:
- US Treasury Federal Insurance Office data indicates insurance costs increased faster than inflation in many areas, with significant variations across zip codes. Homeowners in high-risk regions faced higher premiums and non-renewal rates, reflecting insurers’ responses to elevated claim payouts.
- Rising insurance costs due to more frequent and severe natural disasters are worsening the American housing affordability crisis. We can look at recent natural disasters as cautionary tales. Carlos Martín of Harvard’s Joint Center for Housing Studies states, “There is strong evidence that the combination of high heat, dry climate, and forceful winds brought by climate changes made the [Los Angeles] fires roughly 35% more likely.” The combined property and capital losses for those fires have been estimated at $76 billion to $131 billion, of which ‘potentially only about $20 billion’ was insured.” The potential withdrawal or reduction of federal disaster aid by FEMA could suggest that the burden of disaster recovery may increasingly fall solely on insurers and policyholders.
Led by Professor Phillip Bruner, the forum emphasized that climate risk is not just a technical or regulatory issue; it is a financial and strategic challenge that affects property markets and stakeholders.
“This is about people,” Bruner said. “What can we do in Washington state to bring folks together to build resilience in the face of rising threats to insurance markets and vulnerable communities?” The conversation underscored the need for improved modeling, data access, and public-private coordination.
Panel insights: Investing in resilience
Panelists included David Brunette of Russell Investments, Trent Stoker of PEMCO Insurance, and David Forte from the Washington State Office of the Insurance Commissioner. Their discussion focused on how insurance, investment, and public agencies are adapting to increasing volatility and risk exposure.
As weather-related events, including issues such as extreme heat, become more frequent, obtaining commercial insurance in high-risk regions of Washington is becoming more complex. The panelists stressed the importance of refined risk modeling tools and more transparent communication across the business landscape. Stoker pointed to public-facing tools like climate risk scores on platforms such as Redfin and Zillow and PEMCO’s “For the Love of Prevention” campaign as part of the broader effort to support risk mitigation at the organizational level.
The panelists agreed that climate risk is as much a leadership and planning issue as a technical one. Transparent disclosures and accessible modeling, such as those supported by the Climate Risk Lab, are critical to helping organizations plan strategically and allocate resources more effectively.
Innovation in action
Speakers also highlighted the Climate Risk Lab’s contributions to state and industry efforts. Charles Knutson, senior policy advisor at Amazon, shared how companies are continuing to expand their climate-related planning efforts. Insurance Commissioner Patty Kuderer described the Lab as “where innovation, science, and business come together to conquer climate change.”
A unifying message throughout the event was that collective planning and shared responsibility will be central to managing risk in a changing climate.
The case for climate risk planning
Climate-related financial risk is no longer a theoretical concern. In the U.S., the number of billion-dollar insurance disaster events has grown from an average of seven per year in the early 2000s to 27 in 2024. These trends directly affect capital planning, asset management, and operational continuity.
The Climate Risk Lab works at the intersection of finance, science, and policy to help organizations better anticipate risk through research, geospatial modeling, and open-source tools. This supports more informed, resilient business decision-making across Washington State and beyond. The Lab also serves as a training ground for leaders across sectors, from infrastructure and energy to insurance and technology, through its research, executive education, and partnership-driven approach.
Learn more about the UW Climate Risk Lab here.
