Climate Change and the Insurance Industry

by Kathleen Biggins

Insurance rates are rising, coverage is disappearing, and fingers are pointing in all directions. Yes, humans are moving to areas more vulnerable to natural disasters. Yes, inflation is raising the costs of reconstruction. But the most concerning reason insurance is getting so expensive and elusive is that the industry is finally factoring in the real risks of our changing climate.

Extreme rains, windstorms, hail, more powerful hurricanes, wildfires, heat, and accelerating sea level rise – disasters that insurance companies link to climate change – are more frequent and ferocious than they were in the past. Our homes, communities, and infrastructure were built for yesterday’s norms, not today’s realities or tomorrow’s projections. That leaves all of us, and our economy at large, very vulnerable.

C-Change Conversations is committed to helping people understand how climate change will impact us personally, including what it means for our safety and our wallets. That’s why I was proud to co-present with Steve Fischl, regional product director and vice president at Chubb Insurance, to explore why these challenges are happening, what’s expected in the future, and what we can do to protect ourselves and increase our ability to access adequate insurance.

Sponsored by CBIZ Borden Perlman in early November in Princeton, NJ, the discussion was sobering, but necessary. Key takeaways included that these super-charged disasters are happening everywhere and none of us is safe. Our insurance costs are even impacted by disasters in far-off parts of the world because those disasters drive up costs from reinsurers, which in turn ratchets up costs for US policyholders. The real solution is to stop emitting greenhouse gases and lessen climate change’s impacts everywhere. In the interim, we must invest in infrastructure and systems that will enable us to be more resilient when these disasters hit.

We won’t meet the challenge if we don’t understand the enormity of our financial and personal risk. The effects of climate change on the insurance industry is a “canary in the coal mine” – a clear indicator that we are at real risk and need to take action.