Insurance could become unaffordable, due to climate change

Arthur Neslen in the Bulletin of the Atomic Scientists:

Insurers have warned that climate change could make coverage for ordinary people unaffordable, after one of the world’s largest reinsurance firms blamed global warming for $24 billion of losses in the Californian wildfires. (Loosely speaking, reinsurance companies provide insurance for insurance companies).

Ernst Rauch, Munich Re’s chief climatologist, told The Guardian that the costs could soon be widely felt, with premium rises already under discussion with clients holding asset concentrations in vulnerable parts of the state.

“If the risk from wildfires, flooding, storms or hail is increasing, then the only sustainable option we have is to adjust our risk prices accordingly. In the long run it might become a social issue,” he said after Munich Re published a report into climate change’s impact on wildfires. “Affordability is so critical [because] some people on low and average incomes in some regions will no longer be able to buy insurance.”

The lion’s share of California’s 20 worst forest blazes since the 1930s have occurred this millennium, in years characterised by abnormally high summer temperatures and “exceptional dryness” between May and October, according to a new analysis by Munich Re, one of the world’s largest re-insurers.

More here.

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