Experts sound the alarm on invisible threat costing Americans billions: 'The downside ... [is] significant'

Economic players are stepping into the heat as experts draw attention to the growing risks of prolonged, dangerous temperatures. 

What is heat-related financial risk?

Heat waves don't leave behind toppled trees or broken buildings. Instead, they creep in quietly, draining crops, pushing workers indoors, and sending vulnerable people to the hospital.

And the financial toll is adding up. Researchers and insurance experts are now working to better measure the ripple effects of extreme heat across industries, from agriculture and healthcare to energy and manufacturing.

Companies are increasingly relying on new tools — like address-level heat maps and climate-health cost calculators — to track just how much damage a heat wave can do.

As Tracy Watts, Mercer's U.S. leader for healthcare policy, put it when discussing the matter with Bloomberg: "The health cost is but one of many."

Why is heat-related financial risk important?

While a wildfire or hurricane leaves obvious damage in its path, the impact of heat can be harder to spot but no less devastating.

Warning signs surround us — but they often hide in the background of everyday systems.

Take California, for example. From 2013 to 2022, seven major heat waves hit California, according to Cal Matters, and the damage added up fast. The state lost an estimated $7.7 billion during that time, with impacts ranging from lower agricultural production to a spike in heat-related health issues.

In the Pacific Northwest, the 2021 heat dome turned deadly. Economists estimated it caused around $5.5 billion in total damages, according to data from the Canadian Climate Institute cited by the Williams Lake Tribune.

Nationwide, extreme heat is already costing Americans big — about $100 billion per year in lost productivity, based on a report from the Atlantic Council.

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Experts are paying attention.

"When we look more closely at extreme heat … the downside of a major heat event is potentially significant," said Garrett Bradford, principal at consulting firm Milliman Inc., per Bloomberg. 

How financial experts are addressing the threat

Insurers, consultants, and risk-modeling firms are starting to take extreme heat seriously — and they're rolling out new tools to track and manage the fallout.

Some companies are using platforms like Cotality. Last year, it started adding heat data to wildfire and flood maps, according to Bloomberg, helping businesses get a better handle on which properties are most at risk.

Others are turning to parametric insurance — a type of coverage that pays out automatically based on pre-defined triggers. For industries like farming, utilities, or delivery, that quick cash can be a lifeline when operations slow down.

Meanwhile, HR teams are getting support from forecasting tools that use health data to estimate how rising heat could affect employee wellness and insurance costs. It's all part of a growing push to move from reacting to heat waves to planning ahead for them.

Understanding how heat affects everything from food prices to health insurance is key to making smart choices — whether you're on the job, at the store, or just trying to stay cool.

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