This article was produced in partnership with Victor
When Yvonne Castillo graduated with an architecture degree in 1990, the word “resilience” wasn’t a staple in design language. It certainly wasn’t being used the way it is now—tethered to flood maps, heat domes, or the cost of litigation.
Today, Castillo leads risk management for architects and engineers at Victor Insurance, bringing together a career that’s pinballed between law, lobbying, and now insurance.
“I would never have guessed I’d end up in insurance,” she says, “but after all these years, this is where everything has converged.”
Her unlikely career path always had one common thread: protecting the built environment from forces it doesn’t always see coming. But that convergence of climate, cost pressures, litigation, and gaps in building standards, is now threatening to overwhelm the system Castillo’s spent decades working to support.
A central problem, Castillo argues, is that we are still building for the past. “Architects and engineers rely on codes to guide their work,” she explains. “But those codes are largely based on historical weather data, not future conditions.” That lag, once an academic concern, is now a glaring vulnerability.
Severe weather events are no longer anomalies. In 2021, a historic freeze in Texas halted chemical production and disrupted the plastics industry. The Panama Canal—critical to global shipping—has seen traffic throttled due to water shortages. And in just the past two years, wildfires in California and hurricanes across the Gulf have caused billion-dollar damage events, repeatedly.
If you're designing a building or critical infrastructure to stand for 50 or 100 years, Castillo says, “you need to consider what climate conditions it's actually going to face in that lifespan—not what the weather was like back in the 80’s and 90’s.”
But there’s a disconnect. A study by the American Institute of Architects found that while architects overwhelmingly said codes don’t sufficiently address the resilience needed for their locations in terms of natural hazard risks, both owners and contractors believed they did. That mismatch in understanding, says Castillo, is part of the reason clients aren’t sounding the alarm. “They think if you’re following code, you’re covered. But architects know better, according to this study”
Even before climate factors began to spike, the industry was already under pressure. COVID-era supply disruptions, surging demand, and labour shortages triggered inflation across construction materials. That’s led to a sustained and painful rise in claims costs, particularly in the design and construction space where projects span years and contracts are complicated.
Layered onto that is President Donald Trump’s sweeping tariff plan, unveiled on April 3, 2025. Exceeding expectations in both scope and scale, it signalled a more aggressive stance on trade with key U.S. partners. The move has far-reaching implications that extend well beyond geopolitics. New tariffs on timber from Canada and steel and aluminium from China, Germany, and Japan are poised to sharply increase the cost of building materials.
While for insurers, the most immediate concern is construction, “A contractor can plan for concrete curing time, but not for a tariff war that changes the cost of steel overnight,” Castillo notes. Unpredictable global supply chain rules also make long-term planning nearly impossible. “The tariffs are difficult not just because they increase costs to build or rebuild,” Castillo explains, “but because of the uncertainty - knowing which country is impacted, which exemptions apply, and when they’ll change is a full-time job in itself.”
For those trying to hedge against rising costs, buying materials in bulk or early can help—but that comes with its own risks. Castillo notes some contractors with warehouse space are reselling materials at a profit, but the broader market is still in a guessing game. “Where do you store the materials? What if they’re damaged? How do you know the demand will be there when you need it?”
Climate-driven events only magnify that uncertainty. As she puts it, “When Hurricane Harvey hit, when Ida hit, when the freeze in Texas happened, production shut down. You can’t count on the supply chain to be there.”
One less-discussed driver in the sharp rise of claims costs is immigration policy. “The construction industry depends on labor,” she says. “And when immigration policies reduce the labor pool, costs increase. We need more workers, not fewer.” Fewer workers drive up wages and slow down timelines—two forces that increase the cost of a claim when something goes wrong.
At its core, Castillo says, this is a risk environment that defies linear thinking. “We often describe rising costs as ‘temporary volatility,’ but what we’re really seeing is a structural shift.”
Despite these visible trends, Castillo is concerned that many in the industry are not adapting fast enough - especially when it comes to climate-driven extreme weather. She draws a sharp distinction between weather and climate: the former chaotic and short-term, the latter reliable and projectable enough to model longer-term future risk with increasing accuracy.
“I’ve spoken at multiple industry conferences about the financial impacts of climate change in the built environment, but the connection to claims costs is still underrecognized,” she says.
Some large firms are starting to engage climate consultants, but Castillo says it’s far from industry standard. “We’re still early days. The water’s boiling and the frog is still in the pot. But we’re not adjusting fast enough to how hot it’s getting.” Castillo believes the insurance industry has a unique role to play in bridging the gap between code and climate science. “We need to acknowledge what the science says: climate-related risks are projected to worsen through mid-century and beyond,” she says. “You don’t have to be political to pay attention. You just have to be financially responsible.”
For underwriters and insurers, that means revisiting how they model, price, and communicate risk, especially in sectors like design and construction where projects are long-lived and exposed. “If costs are rising now,” she warns, “imagine what happens when projected future conditions catch up to today’s pricing.”
It also means helping clients become more informed. Castillo points to free public data from the Intergovernmental Panel on Climate Change and NOAA as useful starting points. “If you’re building in Houston or Los Angeles, you can look at regional climate projections. You can talk to your client. You can document the conversation. Courts will increasingly expect that you’ve thought about it- even if you’re not a climate scientist.”
In the end, she says, “We know costs are rising. We know events are increasing in frequency and severity. The formula is already here. What’s missing is the will to act on it
