Premiums will rise as climate change bites, warn insurers
Insurance giants Allianz have warned customers in the US that premiums will rise as destructive weather increases due to climate change.
Reiterating the message that there is an economic cost attached to climate change, Allianz and conservation group WWF have published a report showing that the insurance industry will need to adapt to deal with more frequent and more sever forest fires, floods and storm damage.
The report, Climate Change and Insurance: An Agenda for Action in the United States says the most direct risk to the US will likely come from hurricanes, while rising sea levels over the coming decades could inundate many US coastal cities, and portions of some coastal states such as Florida.
These changes could make insurance unaffordable for customers in high-risk areas, it says, and premiums in states vulnerable to hurricanes are already increasing, with some insurers refusing to offer cover at any price.
But the report is not all doom and gloom and offers constructive, concrete advice on how insurers can address the risks of climate change while encouraging legislators to take action to address greenhouse gas emissions.
A central thread to the report is that American insurers needs to abandon traditional risk modelling based solely on the events of the past and take into account the current scientific predictions of future weather patterns.
European insurers are already making progress in this area.
“We need to better understand the effects of climate change and the changing environment for our customers,” says Clement Booth, member of the board of Allianz.
“But if we can find a way to provide insurance in the face of major changes, from the first transatlantic voyages to global terrorism, then we can also find new ways to both incentivise emission reductions and provide coverage.”
Carter Roberts, president of WWF US said: “Global warming is the greatest environmental threat facing the world, and the people and animals that inhabit it. The cost of doing nothing carries a price tag none of us can afford.
“The insurance industry has a vested interest in stepping up to the plate and being a part of the solution. Allianz has been a leader on this issue and we hope that the entire industry makes climate change a top priority.”
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