Lessons From 2024’s Extreme Weather Events: A Global Perspective

The year 2024 will be remembered as a defining moment in the history of weather-related catastrophes. From unprecedented heat waves to catastrophic floods, the world witnessed the devastating effects of extreme weather patterns that left no corner of the globe untouched.

The property and motor catastrophe adjusters at Sedgwick that I work with navigate the unexpected and operate from an unmatched perspective of global expertise, offering some key lessons learned from these extreme weather events and their implications for the future of claims management.

Global Extreme Weather Events of 2024

The year began with an unexpected and prolonged heatwave in Australia, followed by a series of devastating wildfires that ravaged both urban and rural areas, leading to the displacement of thousands of residents and extensive property damage. In Europe, unprecedented rainfall, resulting in severe flooding across several countries, including France, Germany, Belgium, and the Netherlands brought widespread damages and casualties.

The U.S. was not spared, experiencing a series of hurricanes that caused widespread destruction including Hurricanes Beryl, Francine, Helene and Milton. By November, there were 24 confirmed climate disasters with losses exceeding $1 billion in the United States alone, according to the National Centers for Environmental Information. Asia saw a particularly brutal monsoon season, with countries like India and Bangladesh facing severe flooding and landslides, and China experiencing floods that caused over $15 billion in damages. Above all, each disaster resulted in significant loss of life, making each situation more difficult to bear.

Impact on Property Claims

The extreme weather events of 2024 had a profound impact on property claims worldwide. In fact, according to data by ValuePenguin, nearly $62 million in weather-related property damage has already been tallied since the start of winter. The sheer volume of claims filed due to weather-related damage placed immense pressure on insurance companies and their outsourcing claims partners, testing their capacity to manage and process claims efficiently.

One of the most significant lessons learned was the importance of having robust and scalable claims management ecosystems of internal and external resources. The ability to quickly and accurately assess damage, process claims, and provide timely compensation to policyholders became paramount. Property insurance related legislation, like Florida’s SB 2A law, delivered on its promise of reform on claims processing in the state, and its influence in other locations was felt in 2024, and is predicted to blaze a path for other states and jurisdictions.

Additionally, the events of 2024 highlighted the need for improved risk assessment and mitigation strategies. Insurers have had to re-evaluate their risk models to account for the increasing frequency and severity of extreme weather events. This has led to a greater emphasis on proactive measures, such as lobbying authorities having jurisdiction to implement resilient construction standards and urging policyholders to invest in protective measures like flood barriers, hurricane shutters and fire-resistant materials.

Another critical takeaway was the importance of clear and effective communication with policyholders. In the aftermath of a disaster, policyholders are often in a state of distress and uncertainty. Navigating uncertainty is what the best claims professionals do. Providing clear guidance on the claims process, setting realistic expectations, and maintaining open lines of communication can significantly enhance customer satisfaction and trust, as Sedgwick has seen across more than 10 million claims in 2024, with a number of these following extreme weather, natural disasters, and catastrophes.

Impact on Motor Claims

Motor claims, also referred to as auto claims, were also significantly affected by the extreme weather events of 2024. Floods, hailstorms, and hurricanes resulted in extensive damage to vehicles, leading to surges in claims, as well as the price of coverage. According to E&E News, auto insurance rates climbed 15% in the first half of 2024. One of the key challenges faced by insurers was the need for rapid and accurate damage assessment. The use of technology, such as AI-powered image recognition, proved invaluable in expediting the assessment process and ensuring accurate evaluations.

The events of 2024 also underscored the demand for comprehensive coverage options. Many policyholders were caught off guard by the extent of their coverage limitations, particularly in relation to natural disasters. This has prompted insurers to re-examine their policy offerings and consider the inclusion of more comprehensive coverage options that address the growing risks associated with extreme weather events.

Furthermore, the importance of data analytics and predictive modeling cannot be overstated. By leveraging historical data and advanced analytics, insurers with and through their third-party property and motor claims management partners can better anticipate and prepare for future weather-related risks. This not only helps in pricing policies more accurately but also in identifying potential areas of risk and implementing targeted mitigation strategies.

Future Implications and Strategies

The extreme weather events of 2024 have undoubtedly reshaped the landscape of the insurance industry, and 2025 is expected to bring similar weather patterns, with heavy snow and dangerous temperatures expected to hit parts of the U.S. in January, and a slow developing La Niña potentially leading to adverse conditions. As we move forward, it is crucial for insurers to take a proactive and adaptive approach to managing weather-related risks. This includes partnering with vendors that offer a wide sweeping menu of claims services that are investing in advanced technologies, such as AI and machine learning, to enhance claims processing and risk assessment capabilities.

Collaboration and information sharing will also play a vital role in the industry’s ability to respond to future challenges. By working together with claims vendors that have voluminous data aggregation strategies, government agencies, meteorological organizations, and other stakeholders, insurers can gain access to valuable data and insights that can inform their risk management strategies.

Additionally, there is a growing recognition of the need for sustainable and resilient infrastructure. Insurers can play a pivotal role in promoting and incentivizing the adoption of resilient construction practices and sustainable development. This not only helps in reducing the overall risk but also contributes to building a more resilient society.

The extreme weather events of 2024 have provided the insurance industry with valuable lessons and insights. As we look to the future, it is imperative that we continue to adapt and evolve, ensuring that we are prepared to meet the needs of our policyholders and the broader community with empathy and professionalism in the face of extreme weather events.

Powell is president of EFI Global Inc. and executive vice president of Property Americas for Sedgwick. He specializes in catastrophe-related claims across the world.