Staying Ahead of a Storm of Losses
Eggs and cars aren’t the only things getting more expensive. In 2024 alone, a unique mix of natural disasters—drought, flooding, severe storms, hurricanes, wildfires, and winter storms–caused a staggering $180 billion in damages, nearly double the $93 billion from the previous year.1
The growing frequency and severity of these events are pushing risk management protocols to the brink. Already strained by inflated vehicle values, uninsured collateral, stubborn interest rates, fragile consumer finances, and global tariff uncertainty, many risk strategies buckle under disaster fallout.
Events like the Texas freeze or mountain flooding in North Carolina prove no region is safe from nature’s extremes. The hidden costs of being unprepared—beyond claims and rising premiums—include losses from NPLs, delinquencies, uninsured collateral, and diverted operations that chip away at profit margins.
Credible Risk: Why Subprime Borrowers Are Especially Vulnerable
Subprime borrowers are often already uninsured due to affordability issues. Natural disasters only intensify that strain. After Hurricanes Milton and Helene, an estimated 200,000 vehicles were declared total losses—escalating remediation costs and premiums, and driving up delinquencies.2
Subprime delinquencies are rising faster than average, and many of these borrowers are switching or canceling insurance altogether. That means high-risk collateral is going uninsured at an alarming rate. Post-disaster, the stakes grow even higher. Lenders must balance loss ratios with borrower sensitivity.
Smarter Strategies to Protect Against Uninsured Collateral
So how can lenders protect their portfolio while maintaining borrower trust?
Insurance tracking, now enhanced with AI, remains one of the most effective ways to reduce risk across all credit tiers. Real-time insurance data is now a predictive tool—helping identify defaults before they happen.
Imagine verifying coverage on over 90% of active policies—regardless of lienholder listing. Digital insurance verification delivers that level of visibility, reducing operational drag and improving response time after a climate catastrophe.
It can also cut borrower communication by up to 20%, speeding up the identification of insurance lapses so you can focus on the riskiest accounts.
Stay Ahead of the Storm with Data-Driven Risk Management
Natural disasters are on the rise, and so is the financial risk. Lenders that combine real-time insurance data with modern tracking will be better positioned to protect both portfolios and people—no matter what the forecast holds.
Want to learn more?
Download The Natural Disaster Preparedness Guide from Allied Solutions.
This content was first featured with AFSA.
1 https://www.ncei.noaa.gov/access/billions/events/US/2024
2 https://www.alliedsolutions.net/resources/podcasts/beyond-the-storms-protecting-lenders-in-a-volatile-environment/