Rethinking Insurance Strategy from Risk Transfer to Risk Prevention
In recent years, the insurance industry has largely been operating on a traditional “risk-transfer” model: insured parties pay premiums so that if a loss occurs, the insurer steps in and pays the claim. But as risks evolve — from climate-driven natural disasters to cyber threats to supply-chain disruptions — this model alone is increasingly inadequate. A shift toward risk prevention offers not only greater resilience for policy‐holders and insurers alike, but also a powerful opportunity for job creation, economic growth, and renewing America’s leadership in innovation and stability.
In this article I’ll articulate why this shift is needed, how it can be implemented in the U.S. context, how it will generate jobs — and thus contribute to making America great again — and what obstacles must be overcome.
1. Why move from risk transfer to risk prevention?
a) Rising costs and systemic risks. Insurers are facing growing exposure to risks that are more frequent, more severe, and more interconnected than before. In such circumstances simply transferring risk to insurers becomes ever more expensive (higher premiums, more deductibles) and may not achieve sufficient protection. Instead, prevention — reducing the probability or magnitude of losses — becomes essential.
b) Better alignment of incentives. When the focus is purely on transfer, policy-holders may have less incentive to invest in mitigation (because they know an insurer covers the loss). Shifting to prevention means insurers and insureds share more interest in avoiding the loss in the first place — e.g., through loss control, safety systems, cyber hardening, climate adaptation. This alignment can lower overall costs and improve outcomes.
c) Competitive advantage and value creation. Insurers that lead with preventive services — risk engineering, predictive analytics, loss control consulting — will differentiate themselves in the marketplace. In turn, insured parties benefit by reducing their exposures, achieving lower premiums or better terms, and gaining more stable operations.
2. Implementation: How the U.S. insurance industry can pivot to prevention
a) Expand “loss-control” services and preventive consulting. Insurers should invest in teams that proactively assess clients’ risk exposures (e.g., fire, flood, cyber, supply-chain), provide recommendations for mitigation, and monitor progress. For example, jobs such as Risk Control Consultant, Loss Prevention Engineer, or Cyber Risk Advisor are growing. Indeed, job-boards show thousands of “insurance risk management” openings in the U.S. today.
b) Use data, analytics and InsurTech for early-warning and prevention. Leveraging predictive models, real-time sensors (IoT), remote monitoring, AI/ML, and data analytics enables insurers to spot risk trends early and intervene. Academic work shows how incorporating InsurTech data can improve loss-models significantly.
c) Incentivize policy-holders to invest in resilience. Insurers can offer premium discounts, enhanced coverage or support services for clients who implement proven preventive measures. For example, flood-proofing, cyber-security upgrades, and supply-chain diversification. This turns the relationship from reactive to proactive.
d) Work with public sector and regulation to support prevention. Policymakers can encourage prevention by updating building codes, infrastructure resilience standards, climate-adaptation incentives, and by collaborating with insurers on public-private risk-sharing frameworks.
e) Develop new products that embed prevention. Insurance products can evolve beyond “we pay if you lose” to “we help you avoid the loss, and if you do incur it, we respond efficiently.” For example, “cyber resilience services plus indemnity”, or “business-continuity assurance plus property cover”.
3. Job creation and making America great again
Shifting to a prevention-centric insurance strategy offers substantial opportunities for job creation and economic renewal in the U.S. Here’s how:
a) New specialist roles in risk prevention. As mentioned above, there is already a strong demand for risk management and control specialists: there are 60,000+ insurance risk management jobs listed in the U.S. market. By expanding preventive services, insurers will hire additional professionals: risk engineers, data-scientists (InsurTech), IoT/monitoring technicians, resilience consultants.
b) Growth in supporting industries and services. Prevention always involves installing systems, monitoring, upgrading infrastructure, training staff, auditing controls, and maintaining equipment. For example, cyber-security firms, sensor‐manufacturers, resilience engineering firms, climate-adaptation consultancies. All of these will see increased demand, generating jobs in manufacturing, technology, installation, training and maintenance — especially in “reshoring” contexts.
c) Regional economic revitalization. As insurers seek to support clients across all states, including in regions vulnerable to natural disasters (flood zones, wildfire areas, hurricane-exposed states), there will be investment in local resilience infrastructure (flood-barriers, wildfire mitigation, storm-hardened buildings). These are labour-intensive and regionally dispersed jobs. This helps economic activity beyond the coastal “tech hubs”, thereby “making America great again” by spreading growth and opportunity.
d) Promoting American innovation leadership. By pioneering preventive insurance models, leveraging American InsurTech, AI/ML, and sensor/IoT industries, the U.S. can strengthen its competitive edge globally. Exporting these prevention-oriented services and technologies also supports job creation at home and enhances American economic sovereignty.
e) Strengthening national resilience and reducing costs. Prevention leads to lower losses, fewer claims, less economic disruption. That reduces the burden on government disaster-relief programs and taxpayer exposure. A more stable and resilient economy fosters confidence, investment, and growth — again contributing to America’s greatness.
4. Real-world impacts and illustrate opportunities
5. Challenges and what needs to be addressed
6. Conclusion
Moving from a pure risk-transfer mindset to one of risk prevention offers a win-win: stronger resilience for insured parties and insurers, lower long-term costs, and new growth opportunities. For the U.S., this shift is more than an industry tweak — it can be a driver of job creation, innovation, regional economic renewal, and enhanced global competitiveness. In short: by leading on prevention, America can both protect its citizens and businesses more effectively and reinforce its position as a leader in the 21st-century risk economy.
This is a strong perspective — prevention-focused insurance could really change how communities and businesses think about risk.
This shift toward prevention couldn’t be more urgent — especially in engineering insurance and Plant All Risks, where billions are lost each year not because of catastrophic events, but because of preventable inefficiencies. Across the sector we’re still seeing the same pressure points: inaccurate asset values at inception, fragmented condition data, and subjective assessments at claim stage. These gaps alone contribute to an estimated USD 5 billion+ in annual premium and claims leakage globally — silent losses that compound year after year. What’s encouraging is that data-driven tools now exist that can standardise valuations, verify condition, and track asset integrity long before a loss occurs. When insurers and insureds agree on accurate values upfront, half the friction — and a large portion of the leakage — disappears. Prevention isn’t only about sensors and climate modelling. Sometimes it starts with something as simple and powerful as knowing exactly what an asset is worth, in real-time, from day one. That’s where the industry has the most immediate room for transformation. If we get that right, we don’t just reduce losses — we rebuild trust, strengthen portfolios, and unlock a more resilient insurance ecosystem.