Climate Change and the Insurance Industry
Posted by: Agent Hub
Although climate change continues to be a debate within the political realm, other fields and industries are already preparing for its potential effects by creating solutions to lessen the social, economic and health impacts it may have on American society. The insurance industry in particular is already working to utilize the situation as an opportunity to both remedy some climate change issues and strategize industry plans for improvement.
Below are a few recent developments insurance companies are forming and some information on what the future of insurance may hold.
Climate Change Effects on Insurance
Unfortunately, it has yet to be fully determined how extensively weather patterns will be affected by climate change. However, with the predictions from scientists estimating an increase in damages in a variety of places on a global scale, insurance company losses are likely to increase as well.
Since risk management is a key part of the insurance industry — and because climate change may cause an unpredictable amount of losses that could be exponentially worse than anything seen in the past — insurers will need to adjust how they approach policy premiums, deductibles and claims processes. It’s also in the industry’s long-term interest to invest time, money and strategy in curbing the effects of climate change.
Proposed Solutions for the Industry’s Future
Although it has been said before that “global warming could bankrupt the [insurance] industry,” a lot has changed over the last few decades. A few insurers are continuing to focus more on risk management as their key action to address climate change, but many others are taking even greater proactive steps.
Companies in the industry are embracing this opportunity, ready to take advantage of the challenges they are faced with in the near future with specific programs and plans that are aimed at the root of the climate change problem. Some have even begun pushing for stronger building codes and better planning, promoting loss prevention, expanding efforts to raise awareness of climate change and investing in renewable energy.
However, for these efforts to truly flourish and succeed, everyone in the industry will need to begin joining hands and working together with a clear plan in place. If insurers avoid taking proactive steps, the success and sustainability of the industry and the economy at large will both be threatened.