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Insurers Turn to AI as Climate Peril Costs Surge 93% Since 2019
Climate peril severity rose 93% since 2019, pushing P&C insurers to deploy AI for risk modeling. LexisNexis and Fathom detail how visual-language models improve property inspections and flood simulations.
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The rising severity of climate perils is forcing property and casualty insurers to adopt artificial intelligence for risk modeling, with LexisNexis reporting loss severity climbed almost 26% from 2024 and more than 93% compared to 2019.
Severity hit its highest level in seven years across all perils, according to LexisNexis's latest home trends report. While loss costs dropped by over 4% in 2025 and claims frequency fell nearly 24% from the prior year, the firm's analysts warned that the frequency decline should not be expected to continue. The number of billion-dollar weather events and storms is rising.
The key to keeping peril costs in check is how carriers apply technology, said George Hosfield, vice president and general manager of home insurance at LexisNexis Risk Solutions. Because perils vary by season and year to year, carriers need granular property intelligence to understand both by-peril and macro-level trends, he said.
AI models using visual language are improving digital self-inspection tools for evaluating home preparedness and risk-hardening measures, according to Hosfield and Kelly Rush, director of home insurance at LexisNexis. The models interpret image-based information and apply it to risk evaluation.