Climate change, best fought with insurers

Responding to climate change is a challenge best faced with the aid of the insurance sector, a global expert has said

Insurance News

By Mina Martin

Climate change is serious business, not only for individuals and business who want their property, health, and loved ones protected, but also for the insurance sector.

“Climate change offers up a new challenge for insurers, altering the risk landscape that we have experienced in the past,” wrote Joe Casola, deputy director of the Climate Impacts Group at the University of Washington, in the Seattle Times.

Casola noted that there is ample evidence as to how climate change can increase the risk of some weather-related problems, such as how warmer temperatures can raise the potential for more health-related illnesses; or how drier, hotter summers can lead to more severe wildfires.

To combat these evolving risks, Casola wrote about how communities and businesses in Washington are beginning to plan and take action, saying that “Leadership from the insurance industry could play a vital role in raising our collective resilience.”

The Seattle Times quoted Mike McGavick, CEO of XL Group, as saying: “The job of anticipating and modelling risks is in the wheelhouse of the insurance industry, and risk modelling is a gateway to resilience.”

Casola explained how insurers have great opportunities to devise solutions to combat climate change.

“Globally, the industry has US$25 trillion in their investment portfolios. Their voice matters. And they have a vast array of tools that can communicate and manage risks, such as pricing insurance products, enhancing transparency of their investment choices, and influencing building standards and land-use decisions.”

With the aid and cooperation of the insurance sector, Casola believes that people can be better equipped to prepare for whatever challenges climate change may throw their way.

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