While there are still some people who remain dubious about the reality of climate change, insurance companies are not among them. And, in fact, insurers are warning that climate change could make coverage for ordinary people unaffordable.
Munich Reinsurance, the world’s largest reinsurance firm, blamed
global warming for $24 billion in losses from California’s recent
wildfires. Such costs could soon be
widely felt as premium rises are already under discussion with insurance
companies having clients in vulnerable parts of the state.
With the risk from wildfires, flooding, storms and hail increasing,
the only sustainable option for the insurance industry is to adjust risk prices
accordingly. Ultimately, this may become
a social issue. Affordability of
insurance is critical because if rates go up too much, many people on low and
average incomes in some regions may no longer be able to buy insurance.
The great majority of California’s 20 worst forest fires since the
1930’s has occurred since the year 2000 driven by abnormally high summer
temperatures and persistent drought. The reinsurance giant analyzed decades of
data with climate models and concluded that the fires are likely driven by
Insurance premiums are also being adjusted in regions facing an
increased threat from severe convective storms whose energy and severity are
driven by global warming. These include
parts of Germany, Austria, France, southwest Italy, and the U.S. Midwest.
Linking extreme weather events to climate change is a bit like
attributing the performance of a steroid-using athlete to drug use. The connections are clearer in patterns than
in individual disasters. But the pattern
these days is pretty clear.
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Climate Change Could Make Insurance Unaffordable for Most People
Photo, posted June 12, 2013, courtesy of Jeff Head via Flickr.
Earth Wise is a production of WAMC Northeast Public Radio.