Insurance & Risk Management

In this week’s Thought Leadership, NFP Managing Director of Property & Casualty John Dillon discusses how climate change is shifting the insurance landscape and the importance of having an advisor to help navigate it.

Climate change is here, and it is directly affecting what insurance carriers are willing to cover. Fire, flood, hail and wind losses are becoming more frequent and more severe, leading to major shifts in the property and casualty (P&C) insurance market. In April alone, Indiana saw 20 tornadoes in a single night. Events like these are no longer considered outliers. They are becoming part of a new, more volatile reality and insurers have taken note.

Climate, Cyber and Carrier Behavior

With each catastrophic event, insurers are tightening how they assess and underwrite risk. Flat-dollar deductibles are being replaced with percentage-based models, and wind and hail deductibles are increasing. Currently, roofs, especially older ones, are receiving more scrutiny, leading to limited coverage or even exclusions.

At the same time, cyber threats such as ransomware, phishing and data breaches are becoming more frequent and more expensive. Today, large corporations aren’t the only targets. Smaller businesses are increasingly targeted as well, often due to weaker defenses. Businesses, including smaller companies, need to think about cyber insurance as a core part of their risk strategy. It’s not a luxury. It is essential.

Coverage Strategy and Smart Risk Management

As premiums rise and coverage shrinks, some businesses are exploring alternative approaches such as captives. While not suitable for every organization, captives can offer more control over coverage terms and long-term costs. However, they require operational discipline and substantial financial commitment.

On the other end of the spectrum, selecting the cheapest policy may offer short-term savings but provide limited protection, vague exclusions and difficult claims experiences. A smart risk management strategy means thinking beyond price, asking hard questions, assessing trade-offs and investing in coverage that aligns with real-world exposures.

Overall, carriers are paying closer attention to risks that once might have been seen as manageable. Times have changed and our attitudes around risk need to as well. According to one case, a claim tied to something as basic as poor lighting resulted in a significant payout. These types of incidents were previously considered low priority but are now shaping how insurers evaluate properties and what they are willing to cover.

What’s Happening in Indiana

Understandably, many property owners are asking tough questions about where insurers stand. Businesses in sectors like retail, hospitality and logistics are particularly affected and face increased exposure tied to safety, signage and accessibility. When seemingly small oversights lead to high-dollar settlements, it becomes clear that expectations around liability have changed.

Property owners and operators should be reviewing their physical conditions, updating documentation and addressing potential hazards before they become claim drivers. The best response is to work with a broker who speaks frankly and honestly. A good broker offers more than a policy. They provide a clear view of your risks and real solutions to help protect your business in a changing market.

Across Indiana, more companies are leaning on advisors who can evaluate risk across multiple areas including property, cyber, liability and auto. These partners help assess vulnerabilities, prepare for renewal cycles and structure coverage in a way that protects the business both operationally and financially.

Preparedness Over Panic

While you can’t outrun market changes or wish away rising costs, you can be ready for them. Risk is rising but businesses can stay ahead by planning smart. That means maintaining properties, improving cybersecurity, exploring alternative coverage when needed and reviewing policies for gaps. Insurers are looking at how well risk is being managed, not just priced.

This is not about panic. It’s about preparation and facing today’s market with clear eyes, smart planning and people who know how to get you where you want to go. When storms or cyber incidents hit, having a real plan and a team you trust makes all the difference.