Climate Change and the Insurance Industry

climate change insurance industry

Climate change is a controversial issue, but mostly because of political and philosophical beliefs. The insurance industry has been well aware of the potential impact a changing climate can have on the global environment and has been encouraging efforts to mitigate this impact. Climate change has the potential to bankrupt the insurance industry, as the phenomenon would be responsible for the increasing frequency in major natural disasters that disrupt the global economy and put a strain on the world’s resources.

The insurance industry has been working to steel itself against climate change for some time, despite those that claim that the phenomenon is either nothing more than a fantasy or not as serious of an issue as it is made out to be. Insurers are often free from the philosophical and political dogma that has come to surround the issue, and many have begun advocating actual action on the matter over promised action. Earlier this year, Illinois’ Farmers Insurance filed nine class-action lawsuits against several cities in the state because they failed to take steps to adequately prevent losses relating to climate change.

climate change insurance industryWhile Farmers has since withdrawn its lawsuits, legal action may become more common in the future, especially as insurers begin to grow more serious about climate change. Relatively little is being done to prepare for a changing climate, and this has to do with philosophy more than science. Climate change is often denoted as a “doomsday” event and the blame for this environmental catastrophe is typically placed on humanity as a whole. The consumption of fossil-fuels, driving too much, using air conditioning in hot weather, and several other things are often vilified because of their impact on the environment. The idea that the average person may be contributing to climate change is typically uncomfortable. This discomfort leads to avoidance more often than not.

Politicians are well aware of how uncomfortable the issue of climate change makes voters and many use this phenomenon as a platform. Some politicians have gone so far as to deny the empirical evidence of climate change, suggesting that the entire issue is more opinion than fact. The insurance industry has shown little interest in using politics as a way to postpone action on climate change. Many insurers are decrying this lack of decisive action and some have been investing in clean energy projects and other endeavors to potentially mitigate the effects of climate change.

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