As severe weather concerns increase, many commercial customers lack protection

After a turbulent start to 2025 marked by record-breaking natural disasters across the U.S., extreme weather continues to be one of the most damaging and unpredictable threats to commercial properties. While these threats grow more frequent and severe, a new survey from Nationwide has revealed a widening gap between risk awareness and action to protect against increasing dangers.

Nationwide's survey of commercial property stakeholders, including commercial property owners, new construction builders and business owners, revealed a significant increase in concern about severe weather since 2023. This heightened level of concern is particularly notable among residents in states susceptible to wildfires or hurricanes.

“Our research shows one-third of property owners have faced natural disaster damage in the past five years, and that number jumps significantly to over half in wildfire-prone states and nearly two-thirds in hurricane-prone states,” said Mark McGhiey, Risk Management and Client Services leader at Nationwide. “This data highlights the urgent need for property stakeholders to not only be aware of these risks, but to take proactive steps in mitigating them.”

Property Stakeholders are on high alarm
More than two thirds (67%) of commercial property stakeholders are highly concerned about damages from severe weather and natural disasters, a 5-point increase from 2023, but this rises to 93% (+28 points) and 86% (+16 points) in wildfire- and hurricane-prone states, respectively.

Of the perceived weather risks they face, national property stakeholders are most concerned about damaging winds (88%), flooding (78%), lightning (78%) and tropical storms or hurricanes (75%) – with levels of concern across each having increased more than 10 percentage points since 2023.

Respondents are also more concerned about the impacts of business interruption (41%, +13 points) and structural damage (50%, +8 points) to their company properties compared to 2023.

Businesses are taking on financial risks
Despite their weather concerns, 26% of commercial property stakeholders admit knowingly carrying inadequate insurance coverage to account for severe weather events, an 8-point increase. Most insurance agents also say at least 4 in 10 commercial customers they serve are underinsured for severe weather impacts.

At the same time, property owners are looking for relief on insurance costs. Three-quarters (76%) are actively seeking opportunities to cut costs on their insurance policies and 42% say they’re willing to reduce insurance coverage to shrink premiums.

Stakeholders are also doing less to proactively mitigate risks, suggesting economic uncertainty and increased construction costs are barriers to taking action.

• Only 31% report willingness to invest in measures that improve their properties’ resilience to weather events, a 22-point drop from 2023.
• Those who are willing to improve their properties are open to paying up to $10,000 to do so, down 50% from 2023*.

Protection requires more than a policy
While 95% of national property stakeholders say they have a response plan in place in the event of severe weather damage, 1 in 5 agents (19%) estimate that less than half of their clients have a risk management plan in place to prevent weather disruptions.

The research also suggests agents and carriers can do more to help fill these gaps with customers. Only 34% of agents prioritize sharing carrier-provided risk management resources for their clients related to weather preparation. Another 33% only do so when asked by their customers.

"Protection against severe weather requires more than just insurance policies; it demands a robust business continuity plan. Without a comprehensive approach that includes both, business owners will be stuck in an endless cycle of financial strain and disruption as weather becomes more dangerous and unpredictable across the US, not just on the coasts,” said McGhiey. “It's imperative that property owners, agents and carriers work together to bridge these protection gaps and ensure resilience against future climate risks."

Learn more about weather risks and risk management resources, and view the full findings from Nationwide’s Agency Forward survey here.

Methodology:
Nationwide commissioned Edelman Data and Intelligence to conduct a national online survey of 500 commercial property stakeholders and 400 independent insurance agents from January 24 to February 13, 2025.

*Sample size <100, directional findings only.