Expanding employee benefits: Should you look into climate catastrophe insurance?

Natural disasters will likely become more numerous and severe as climate change worsens over the next few decades. Do benefit leaders need to be ready with a solution right now?

According to the National Centers for Environmental Information, the number of natural disasters with damages exceeding a billion dollars rose from an average of three per year to over 17 in the last 40 years. Meanwhile, the Trump administration has cut staff and grants at the Federal Emergency Management Agency (FEMA), which is responsible for helping communities prepare and recover from natural and manmade catastrophes. President Trump has specifically targeted blue states, with 19 claiming they have not received millions of dollars earmarked in at least 215 FEMA grants.

"As we head further into 2025 and beyond, we're seeing a response at the national level that disaster declarations might not be as forthcoming," says Nakita Devlin, co-founder and CEO of catastrophe insurance provider Ric. "And the ability for a homeowner to get funding from FEMA or some federal disaster assistance is going away."

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That's where employer-provided catastrophe insurance comes in. Through Ric, employers can provide their employees with insurance that protects against the financial loss brought on by natural disasters. Currently, Ric is set to launch its first product, flood insurance, by the end of this year. Employers can provide it as a voluntary benefit, and if employees opt in, they pay $14 a month and will receive an immediate payout of $10,000 if impacted by a qualifying event.

"We are also in the process of developing extreme heat, wind speed and wildfire products," says Devlin. "We really want to create a robust suite to address the climate concerns of employers across the U.S."

Devlin points out that catastrophe insurance primarily serves large corporations and individual property owners. However, this leaves a big protection gap — and when disaster strikes, people typically lose more than their immediate property. They lose money in the form of missed wages, hotel bills, extra child care needs and more, underlines Devlin.

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"We saw an opportunity to distribute these catastrophe products with the [employer] acting as the distribution point," she says. "They help create more insurance penetration in their communities against extreme weather events."

Devlin believes widespread access to catastrophe insurance is crucial, and by getting involved, employers could ensure that entire communities have resources to fall back on. 

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"As an employer who operates in a community, this should absolutely be part of their business continuity plan and HR plan," says Devlin. "So if you're a forward-looking employer, that's absolutely something you should be looking to provide."