InnSure’s Total Cost of Risk Simulator and Community Insurance Program project selected as a RISE Riverine Community Resilience Challenge winner
Developed in partnership with HR&A Advisors and Stantec, InnSure’s winning program will help communities manage the uninsured flooding-related risks that impact a locale’s protection gap.
BOSTON, November 11, 2024 — InnSure, a nonprofit innovation hub catalyzing novel insurance solutions that address climate change risk, announced that its proposed Total Cost of Risk (TCOR) Simulator and Community Insurance Program project is one of the winners of the RISE 2024 Riverine Community Resilience Challenge.
In partnership with HR&A Advisors (HR&A), a mission-driven economic development and public policy consulting firm, and Stantec, a global leader in sustainable design and engineering, InnSure proposed a tool to dynamically calculate the full spectrum of risk impacts to people, assets, and communities based on different risk mitigation and transfer scenarios. With the funds provided by the RISE Challenge, which sought innovative solutions that support comprehensive pre- and post-disaster protection against flood threats impacting the Southwest region of Virginia, InnSure, HR&A, and Stantec will now work with RISE to identify a pilot community for the simulator and insurance program.
The TCOR simulator will address a major gap in the current insurance market: the true cost of catastrophic events on household and local government budget sheets are not accounted for in the pricing of risk or insurance products. The results, data, and insights from the simulator will be used to inform a preliminary design for a Community Insurance Program and quantify the net community-wide costs across three categories: economic loss costs, climate adaptation, and insurance costs. With a full understanding of the community-wide costs, leaders can assess the scale of the “uninsured losses” in the community, which is the key metric for community-scale risk management and investment planning.
“The natural catastrophe insurance protection gap in the United States currently stands at $479 billion, but that number will likely grow as a result of climate change-driven extreme weather patterns, putting communities’ insurability at risk and potentially creating economic instability and insolvency. To close the gap in a meaningful and sustainable way, community planning must be conducted through a risk and insurability lens,” said Charlie Sidoti, InnSure Executive Director.
“While local community leaders are best positioned to manage community insurability, they lack the analytical tools necessary to manage insurability proactively and effectively,” Sidoti added. “The TCOR simulator addresses that and aims to put control of a community’s insurability into the hands of community leaders, with a future insurability management planning approach that offers a comprehensive, transparent, and community-driven accounting of a community’s total cost of risk.”
A key component of the TCOR simulator is that it will examine uninsured average annual loss (UAAL). While average annual loss (AAL) is the cost of loss and damage a community is expected to experience, which can be described on an aggregate (community-wide) or on a per-capita basis for catastrophe scenarios, UAAL describes the community’s protection gap and is what communities suffer the most after disaster events because these losses are often shouldered by household and local government balance sheets.
By quantifying UAAL, the TCOR analysis enables community leaders to advocate for better insurance products that cover health and displacement costs and that make payouts quicker, providing critical financial relief to affected individuals. Understanding UAAL across community assets and fiscal revenues also empowers local governments to prioritize investments that stabilize or increase property tax revenues, ensuring long-term fiscal stability and resilience.
“We see in communities across the U.S. that insurance companies are making business decisions about coverage, leaving communities and governments at greater risk. With TCOR and the Community Insurance Program, our goal is to empower communities with planning tools that can help them engage in proactive and community-centered planning about risk management and resilience investments,” said Jonathan Meyers, Partner at HR&A Advisors. “This set of products will directly benefit Southwestern Virginia communities and others across the country experiencing rising risks due to floods, hurricanes, wildfires, heat, wind, and other climate-related risks. With these tools, communities will be better able to make investment decisions comprehensively, equitably, and inclusively, informed by the total cost of climate risk.
“Winning the RISE Challenge with our partners InnSure and HR&A underscores the critical need to address the complex challenges that are increasing the insurance gap in communities,” said Dean Staples, Director of Growth and Innovation, Stantec. “By leveraging our engineering expertise, science-based capabilities, and deep-rooted commitment to the communities in Southwest Virginia, Stantec is pleased to partner with InnSure to drive meaningful action through innovative solutions like TCOR.”
HR&A will support economic, fiscal, and financial analyses for TCOR’s relevant components and support stakeholder engagement, program design, and implementation. Stantec will bring engineering and science-based products and services that will support development of the TCOR simulator. In InnSure’s role as lead entity, they’ll oversee project management, ensure all project deliverables are met, and act as a liaison between the selected pilot community, the rest of the team, and other outside insurance experts.
About InnSure
InnSure is a nonprofit innovation hub with a mission to catalyze novel insurance solutions to address climate risk challenges. Through its initiatives, InnSure brings together innovators from inside and outside of the insurance industry to contribute to a systemic rethinking of how insurance is delivered, from product design and distribution, to underwriting practices and risk capital/capacity management.
About HR&A Advisors
HR&A Advisors, Inc. (HR&A) is an employee-owned company advising visionary clients on how to create vital places, build equitable and resilient communities, and improve people’s lives. Learn more at www.hraadvisors.com.
About Stantec
Stantec is a global leader in sustainable engineering, architecture, and environmental consulting. The diverse perspectives of our partners and interested parties drive us to think beyond what’s previously been done on critical issues like climate change, digital transformation, and futureproofing our cities and infrastructure. We innovate at the intersection of community, creativity, and client relationships to advance communities everywhere, so that together we can redefine what’s possible. www.stantec.com.
