Florida’s hospitality industry serves as one of the more obvious case studies about risks inherent to the location-driven business model as catastrophic weather events grow more common with climate change.
Between 2020 and 2024, intense hurricanes like Ian in 2020 have made for a volatile business environment, sapping Florida’s hotel inventory (a 12 percent drop in the most affected regions), reducing tourist demand and causing economic strain as damages from 24 billion-dollar disasters mounted.
While Florida’s lodging sector has been able to largely recover since Ian, intensifying weather extremes keep hospitality businesses across the nation at risk. In 2025, the U.S. was battered by 23 catastrophic weather events—severe storms, wildfires and drought—that each caused at least $1 billion in damages. Last year ranked just behind 2023 (28) and 2024 (24) for billion-dollar disasters.
Effectively managing such exposures has become a pressing priority for hospitality businesses, especially as the problem has made traditional insurance coverage harder to access and often less comprehensive. Even when coverage is available, critical expenses like rent, utilities and loan payments are usually excluded. Business interruption coverage is of limited help. It often has exclusions and may not even be available for certain disasters.
Three solutions, ideally used together in a holistic resilience strategy, are worth looking at: catastrophe (CAT) modeling; Risk Management Information Systems (RMIS) and parametric insurance.
A Look at What the Tools Do
Applying a combination of these solutions helps hospitality businesses proactively address their unique exposures, improving resilience in the process. Here’s an overview:
- CAT modeling: understanding exposures. Catastrophe modeling is a key starting point, using computer modeling to project losses from future catastrophes of any sort. Applying historical data and predictive analytics enables business owners to identify potential risks and understand their potential financial impact. It’s important for highlighting issues that are instrumental for insurance planning, like outdated valuations, exposures that come with business growth and unintentional coverage gaps.
- RMIS: improving risk organization. A RMIS organizes claims tracking, incident logging and property data centralization to streamline claims management and enhance business oversight. This single hub for organizational risk eases claims preparation, improves visibility across multiple properties and uncovers problematic risk trends.
- Parametric insurance: tailored for perils. This insurance provides a prespecified payout, with customizable terms, based on a local weather event’s magnitude. Policies are tailored for specific purposes like wind speed or flood depth, paying once the benchmark has been met. It ensures operators aren’t left without recovery resources. Payouts are faster and undisputed. In addition to offering critical business income, coverage can also extend to disrupted third party infrastructure and support deductible buy-downs. With it, hospitality firms are in a better position to manage costs and maintain financial stability after catastrophic events.
How to Integrate These Solutions
Using these three solutions holistically leads to proactive risk management planning. Here’s how to look at their roles:
- CAT models are a guide, regularly updating data to provide up-to-date insights on emerging risks.
- RMIS is a data aggregator, invaluable for creating a risk strategy. Even as the property portfolio grows, it will continue to tailor the best approaches to managing the risks.
- Parametric coverage is an ideal way to minimize coverage gaps, with RMIS data informing policy customization.
Waiting until the crisis strikes to leverage these solutions is a sure way to limit options and raise costs. This proactive approach is invaluable for making informed decisions that offer the best financial protection while enhancing resilience.
Important Questions to Ask
Operators looking to strengthen their strategies for optimal management of catastrophic risks should explore the possibilities with their broker. Some important questions:
- Has CAT modeling been used to assess our exposure across all of our properties?
- What gaps in business income or deductibles could be addressed with parametric?
- What trends in near misses and incidents have we experienced?
- What RMIS platforms are available and how extensive is their support?
- How does collaboration with a parametric provider to tailor a solution for us take shape?
- What coverage for third-party infrastructure risks should be explored?
- What’s the impact of these tools on our insurance strategy over the coming three to five years?
A strategy built around CAT modeling, RMIS and parametric insurance is tailored and phased, designed with the parameters of the business’ particular risk profile, budget and long-term goals. Optimal results can be achieved when the process is part of a collaborative partnership between the client, insurance broker and carrier.