It’s looking pretty clear at this point that manmade climate change is responsible for an increase in extreme weather events worldwide. The evidence is all around us: we can simply look out the window and see more hurricanes, more wildfires, and just generally more natural disasters that can seriously threaten our way of life on Earth.
They can also seriously threaten our economy. According to Insurance Journal, the insurance industry is one sector in particular that’s struggling with the impact of climate change. As businesses and individuals start to face the increased risk of damage to their property that natural disasters present, insurance premiums have naturally had to increase. As a result, the insurers have begun to lose customers. The International Association of Insurance Supervisors (IAIS), an international organization comprised of hundreds of insurance supervisors and regulators, outlined all of this in a recent report.
“It is important to recognize that insurers may be well versed in understanding the dynamics of such extreme events, and may able to adjust exposures through annual contract repricing,” the report stated. “However, the potential for physical climate risks may change in nonlinear ways, such as a coincidence of previous uncorrelated events, resulting in unexpectedly high claims burdens.”
The IAIS report included a great deal of evidence. The organization combed through 59 studies in scientific journals and found that the vast majority of them said climate change was increasing the risk of extreme events. They also came out with an estimate that in the decade between 2005 and 2015, the total financial losses stemming from these events were over $1.3 trillion. The damages are also increasing year-over-year—in 2017 alone, they amounted to $340 billion, the second-highest annual figure ever.
It’s unclear what should be done about this growing climate problem, although experts quoted by Insurance Journal had some suggestions. Jeremy McDaniels, secretary for the Sustainable Insurance Forum, said that those in political power worldwide should be applying whatever pressure they can to enact tougher climate regulations.
“The process to advance specific guidance for supervisors is a next step,” McDaniels said.