Insurance industry isn’t ready for what climate change has in store

insurance industry climate change

insurance industry climate changeThe damaging severe weather is becoming more frequent and more expensive in the U.S.

Last year in the United States, there were 11 extreme weather events that struck various parts of the country each leaving a minimum of $1 billion worth of damages behind, as well as thousands upon thousands of claims to the insurance industry.

Superstorm Sandy, alone, left behind economic losses of $50 billion, not to mention the loss of human life.

That storm also brought with it a cost tens of billions to the insurance industry, particularly to homeowners and property & casualty firms. The frequency and intensity of extreme weather events is increasing, and many are wondering if the insurance industry has a plan in place to deal with the increasing cost and regularity of the damage.

Experts are beginning to feel that the insurance industry is unprepared for the rapid changes to the global climate.

That said, the American insurance industry has not been blind to the climate trends or the associated cost that it is facing. They are very aware of the increasingly intense and extreme weather events as well as the more gradual and less severer shifting in weather patterns. They have been keeping a careful eye not only on the increase in events such as hurricanes and tornadoes, but also to events such as droughts and flooding from overflowing rivers.

And yet, according from a newly released report from Ceres, the insurance industry within the United States still does not seem to be prepared. The report said that it is “only just beginning to address the effects climate change may have on their businesses.” Ceres is a group of companies, investors, and public interest groups, that is a sustainability leadership advocate.

Mike Kreidler, the insurance industry commissioner for Washington state, is also among the leading advocates for stronger disclosure and action for climate risk by insurers. He stated that “Climate change is potentially a serious financial threat to the insurance industry, and needs to be on insurers’ and regulators’ radar.”

Kreidler went on to say that if the products from the insurance industry are to remain both affordable and available, then insurers will be required to adapt to the ever changing trends in climate.

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