21 October 2016 Insurance

Climate change may make many forms of protection unaffordable

The insurance sector is concerned that continuing global rises in temperature could make it increasingly difficult to offer affordable financial protection, according to Insurance Europe, a representative body for 34 national insurance associations.

Climate change has been identified as an emerging risk by leading insurers and reinsurers over 20 years ago and is now recognised as an issue of global importance.

The Intergovernmental Panel on Climate Change has reported that the effects of climate change can now be observed across all continents and oceans. The continued rise in average global temperatures is expected to lead to more frequent and severe natural catastrophes around the world.

Insurance Europe has run a campaign that called on policymakers, industry leaders and the public to pledge their support for world leaders to agree to take action to limit the effects of climate change to below 2°C above pre-industrial temperatures.

Meanwhile, insurers are updating their risk assessment and underwriting policies. Some have moved from using historical risk assessment methods for natural catastrophes to forward-looking risk models.

These predictive methods take into account long-term changes in climate and factor in the shift in the range of natural catastrophes. This, in turn, can assist insurers to develop tailor-made products for consumers with different risk profiles.

Individual insurers are also incorporating incentives into their products to encourage policyholders to reduce their own carbon footprints. Other insurers aim to invest more in environmentally friendly financial assets, such as green infrastructure or renewable energies.

However, public authorities must take the leading role in enhancing public resilience to the effects of climate change, mainly through effective prevention planning, according to Insurance Europe.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk