Climate change may be a significant problem that cannot be ignored
Natural disasters are nothing new to the world. Countries have been battered by floods, hurricanes, earthquakes, volcanic eruptions, and other catastrophes since before they were officially countries. In the world of business, few industries are so well acquainted with natural disasters as the insurance industry. The industry, as a whole, is well versed in the monitoring of weather patterns and has been able to accurately predict the impact an effects of several natural disasters around the world. According to some of the world’s largest reinsurance groups, the industry is now faced with a new threat that cannot be easily brushed aside: Climate change.
Insurers unconcerned with the controversy surrounding climate change
The insurance industry has long been attuned to the concept of climate change. Though the issue is controversial, especially in political circles, the majority of the insurance industry is not concerned about the cause of the phenomenon, only the extreme weather that may be a result. From rampant flooding to severe hurricanes, the effects of extreme weather are being felt all over the world, leading reinsurers to call for the “climate-proofing” of the insurance industry.
Reinsurers note drastic impacts of extreme weather
According to Munich Re, one of the world’s largest reinsurance organizations, North America has seen a dramatic increase in natural disasters over the past two years. Allianz, another massive insurance group, claims that 40% of the industrial claims it pays out are associated with natural disasters. Swiss Re notes that the insurance industry is already exposed to the financial impact of natural disasters, and claims that climate change will worsen the problem in the future.
Insurance prices may go up as the result of climate-proofing the industry
Climate-proofing the insurance industry is no simple task. Insurers will have to take into account the potential effects of extreme weather and be able to adjust themselves accordingly. Unfortunately for consumers, this is likely to mean higher insurance costs for properties. Those with homes in areas that had traditionally seen almost no natural disaster activity may soon find that they are now at risk of falling victim to an unexpected catastrophe.