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AudibleWhile increasingly hostile weather has played a role in growing annual catastrophe losses that now average $132 billion globally, it’s actually non-hazard factors such as oil prices, construction materials, and labor costs that account for 80-90% of the cost. That’s the surprising research finding from global reinsurance broker Gallagher Re. The lines between “primary” and “secondary” perils also need rethinking.
Former Florida Deputy Insurance Commissioner Lisa Miller sits down with the chief researcher, and with the chief risk officer of one of Florida’s largest property insurance companies to discuss the importance of considering these non-hazard factors in rate calculations, and the need for better building codes, resilience efforts, and potential legislative incentives to mitigate risks and reduce costs.
Steve Bowen, Chief Science Officer, Gallagher Re
Ryan Hodges, Senior Vice President of Risk Management, American Integrity Insurance Company
Show Notes
Joining Host Miller are Steve Bowen, Gallagher Re’s Chief Science Officer and researcher behind the Q1 2026 Gallagher Re Natural Catastrophe and Climate Report, and Ryan Hodges, Senior Vice President of Risk Management for American Integrity Insurance Company, headquartered in Tampa, Florida. The focus was on the practical implications the research findings have for insurance companies, reinsurers, policymakers, builders, and consumers alike. Miller opened the discussion by noting that global insured catastrophe losses now average approximately $132 billion annually and that severe convective storms − including thunderstorms, hail, tornadoes, and straight-line winds − have become major contributors to those losses.
The Rise of “Non-Hazard” Cost Drivers
While climate and weather patterns certainly matter, the Gallagher Re report concludes they account for only about 10% to 20% of the increase in insured losses over the past two decades.
“When you’re looking at the overall frequency of events, there’s not really any data that suggests that we’re seeing an overall increase in the number of the events themselves,” said Bowen, who is also a meteorologist. “We’re starting to see some emerging signs that events are behaving a bit more radically, there’s more volatility than what we’ve seen before in the past, but it wasn’t enough of an obvious signal for us to feel like this is really what’s driving why losses continue to go up.”
The report found that 2008 marked a major shift in replacement and exposure costs, and identifies several major non-hazard contributors to the remaining 80% to 90% of rising loss severity, including:
- Oil price increases affecting asphalt roofing materials
- Rising labor and construction costs
- Supply chain disruptions
- Inflation and consumer price index increases
- Claims litigation and social inflation
- Urbanization and population growth in exposed regions
All of the above have led to the majority of higher replacement costs following catastrophes.
Urbanization and the Expansion of Risk
One of the non-hazard factors noted is the increasing concentration of people and property in vulnerable areas. Bowen explained that even as storm frequency remains relatively stable, the expansion of development into exposed regions dramatically increases insured losses. Areas that once contained open land are now densely populated with homes and businesses directly in the path of storms, which he describes as “the expansion of the bullseye.”
“You can have a same-size hail swath from 10 years ago that traverses the same areas, but where there may have just been a lot of nothing, there’s now properties that are in harm’s way. You don’t necessarily need to have a complete loss of a structure to lead to significant losses, either. If you have more and more properties under the footprint that do get affected, even a partial amount of loss can aggregate to a really high number really quickly, and we’re talking about Florida specifically,” said Bowen. Florida’s continued population growth and coastal development were central examples throughout the discussion, particularly in relation to hurricane and flood exposure. “Human beings are addicted to risk,” Bowen added. “We love moving into the high-risk areas.”
Building Codes, Mitigation, and Resilience
Ryan Hodges emphasized that Florida has some of the strongest building codes in the nation and credited those standards with improving property performance during recent hurricanes.
“We saw really good performance in our new construction book… because they were built to code, they were inspected properly,” said Hodges, referencing Hurricanes Helene and Milton. American Integrity Insurance is one of the top five property insurance writers in Florida with nearly 400,000 policyholders.
The discussion focused heavily on resilience efforts, including:
- Elevated homes in flood-prone areas
- Wind mitigation improvements
- Insurance Institute for Business & Home Safety (IBHS) Fortified Home standards
- Stronger roof coverings and underlayment
- Better enforcement of building codes
Hodges noted that resilience improvements can significantly reduce losses but acknowledged the challenge remains affordability.
“Yes, they’re better homes. The risk mitigation is great, but they’re more expensive,” he said.
The Roofing Debate: Asphalt Shingles vs. Stronger Alternatives
The discussion included roofing systems and the role they play in property insurance losses. Miller discussed a recent Louisiana law and proposals in Florida to incentivize stronger roofing systems, including metal roofs and more durable underlayment, as alternatives to traditional asphalt shingles. She referenced former state Senator Jeff Brandes, who recently urged the Florida legislature to eliminate the sales tax on standing seam metal roofs.
Bowen noted that the United States overwhelmingly relies on asphalt shingles more than nearly any other developed nation, largely because of cost considerations.
“There’s no question the U.S. is king when it comes to asphalt shingles,” Bowen said. “It’s become part of our DNA.” He said the challenge will be convincing the U.S. construction industry to make the switch.
“No offense to our people that make roof felt, but that’s your grandmother’s underlayment,” said Miller. “The research, of course, is clear that having a non-felt, stronger underlayment makes all the difference in the world if something does happen to the roof covering.”
She referenced legislative testimony last year by Florida Insurance Commissioner Michael Yaworsky that ten-year-old asphalt shingle roofs cannot provide full protection against 100 mph winds or stronger. He cited a legislatively-mandated report that said Florida roofs beginning at age six years “exhibit higher failure probabilities compared to those without the roof aging effect,” due to “cohesion failure” in the underlying sealant. The report was based on damage from hurricanes Irma, Michael, and Ian and cited tests from the Insurance Institute for Business & Home Safety, whose representative backed-up the claim.
Miller asked Hodges, from a company and agent perspective, how insurance carriers can make the case to consumers for stronger mitigation.
“The other thing that we would stress to homeowners and to insureds is if you’re in an area that you know is a little bit more risky, you need to make sure you’ve got the proper risk mitigation around the house… from an engineering perspective, it needs to be a sound structure,” said Hodges.
Rethinking “Primary” and “Secondary” Perils
Bowen noted that severe convective storm losses alone have risen from roughly $10 billion annually in 2008 to more than $50 billion annually in recent years in the U.S. What was once viewed as a “secondary peril” is now among the industry’s largest aggregate loss drivers. He challenged the traditional insurance industry classification of hurricanes as “primary perils” and severe convective storms as “secondary perils,” noting the data showing that thunderstorm losses have actually exceeded hurricane losses on an aggregate basis over the past two decades.
“If you’re talking about thunderstorms, it’s actually been more expensive on an aggregate basis over the last 20 to 25 years for the insurance industry than it has been for hurricanes. That’s a pretty remarkable statement to make,” Bowen said.
He argued that risk classification should be more tailored to the state, region, and country as to what its likely ‘primary peril’ is – and the same for the specific portfolio of risk of an individual insurance company. “That would certainly be my preference in terms of how we look at these perils moving forward, because it’s not a one-size-fits-all approach. It’s going to be different everywhere,” said Bowen.
Hodges agreed, warning that labeling certain risks as “secondary” can unintentionally minimize their importance.
“It really still only takes one event to make you see, ‘Oh, we thought about that incorrectly,’” Hodges said.
Balancing Affordability, Risk, and Resilience
Throughout the episode, the guests repeatedly returned to a central public policy tension: how to balance insurance affordability with stronger resilience standards and adequate financial protection.
The discussion emphasized that while stronger homes, fortified roofs, and better mitigation reduce losses, they also increase upfront costs for homeowners and builders.
At the same time, failing to invest in resilience contributes to higher insured losses, rising premiums, and reduced insurance availability over time.
Host Miller framed the challenge as one requiring collaboration among insurers, reinsurers, regulators, builders, contractors, legislators, and consumers alike.
“These storms are not your grandmother’s storms, but they’re not the primary driver of the loss cost increase we’ve been seeing over the past 18 years, and especially in the last five years. But the cost associated with the severity of these storms, they continue to climb,” noted Miller. “They impact the availability and affordability of property insurance overall, and per this Gallagher Re report, most of the rise can be explicitly tied to macroeconomic and socioeconomic drivers.”
Links and Resources Mentioned in this Episode
Q1 2026 Gallagher Re Natural Catastrophe and Climate Report (Gallagher Re, April 21, 2026)
American Integrity Insurance Company
Episode 60 – Our Growing Catastrophe Risk (Florida Insurance Roundup podcast, October 12, 2025)
Florida Legislature’s 2022 and 2023 Insurance Consumer and Litigation Reforms (Lisa Miller & Associates)
Final Report of The President’s Council to Assess the Federal Emergency Management Agency and Overview Presentation (FEMA Review Council, May 7, 2026)
Louisiana Fortified Roof Tax Credit Program (Louisiana Department of Revenue)
Jeff Brandes: Before the storm — two smart tax cuts Florida can’t miss this Special Session (Florida Politics, May 12, 2026)
Commissioner Yaworsky Testifies on Asphalt Roof Aging Deficits (LMA Newsletter of February 10, 2025)
2024 Residential Wind-Loss Mitigation Study (Florida Office of Insurance Regulation, June 28, 2024)
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The Florida Insurance Roundup from Lisa Miller & Associates, brings you the latest developments in Property & Casualty, Healthcare, Workers’ Compensation, and Surplus Lines insurance from around the Sunshine State. Based in the state capital of Tallahassee, Lisa Miller & Associates provides its clients with focused, intelligent, and cost conscious solutions to their business development, government consulting, and public relations needs. On the web at www.LisaMillerAssociates.com or call 850-222-1041. Your questions, comments, and suggestions are welcome! Date of Recording 5/8/2026. Email via [email protected] Composer: www.TeleDirections.com © Copyright 2017-2026 Lisa Miller & Associates, All Rights Reserved
