Climate insurance gap of $100 billion requires industry shift
The ‘protection gap’ is widening and a key role of the insurance industry is under threat as climate-related catastrophes worsen according to two reports published Wednesday.
ClimateWise, the network of 29 insurance industry bodies which is convened by the University of Cambridge Institute for Sustainability Leadership, warns in its
annual review of the ‘protection gap’ that weather-related catastrophes have increased six-fold since the 1950s.
While economic losses have increased five-fold since the 1980s to around $170 billion today, the gap between losses and those covered by insurance has widened from $23 billion to $100 billion annually (based on
Swiss Re data).
“The insurance industry’s role as society’s risk manager is under threat,” said Maurice Tulloch, Chairman of Global General Insurance at Aviva and Chair of ClimateWise.
“Our sector will struggle to reduce this protection gap if our response is limited to avoiding, rather than managing, society’s exposure to climate risk. As a risk carrier and risk manager, the insurance industry has significant, and as yet untapped, potential to lead others, in reducing this gap,” added Tulloch.
In its second report, ClimateWise says that the insurance industry can start to align its asset management, underwriting and risk management activities to support greater investments in resilience across financial markets.
Recommendations in
the report include support for green bonds, resilience impact bonds and investments in resilience-enhancing infrastructure.
“The insurance industry will inevitably be impacted by the physical, transition and liability risks that climate change presents,” said John Scott, ClimateWise’s ‘Investing for Resilience’ Chair and Chief Risk Officer,
Zurich Global Corporate,
Zurich Insurance Group. “Finding viable ways to help society adapt and become more resilient to the inevitable changes related to ongoing climate change is vital.”
Florida regulator praises insurers for hurricane response
The insurance commissioner for Florida says that he is “encouraged” by the responsiveness of the state’s insurance industry following hurricanes Matthew and Hermine.
David Altmaier was speaking at a roundtable discussion attended by 25 insurers and state emergency managers along with Florida’s chief financial officer Jeff Atwater.
“We will not accept anything less than the best and most efficient effort from every single insurance company operating in the state of Florida,” said CFO Atwater. “Commissioner Altmaier and I are pleased with what we’ve seen thus far, but we will continue to meet with residents until Floridians’ concerns have been addressed.”
Almost 200,000 claims totaling more than $100 million resulted from the two hurricanes.
Millions of older Americans’ teeth create insurance opportunity
America’s seniors are risking health issues by failing to get regular dental check-ups and a big part of the reason is underinsurance as they move to Medicare.
Just 12 per cent of seniors have some form of dental insurance according to a report from the John Hopkins Bloomberg School of Public Health; and those without insurance are less likely to have visited a dentist in the past year (27 per cent vs. 65 per cent with insurance) based on Medicare beneficiaries data from 2012.
The report says that 80 per cent of those under 65 have dental insurance as part of their employer-sponsored health insurance programs but on retirement many lose their benefits and do not buy dental cover elsewhere.
“Medicare is focused specifically on physical health needs and not oral health needs and, as a result, a staggering 49 million Medicare beneficiaries in this country do not have dental insurance,” said study author Amber Willink, PhD, an assistant scientist in the Department of Health Policy and Management at the Bloomberg School.
Willink is calling for a solution to this large unmet insurance need to encourage seniors to take care of their oral health, probably involving an additional cost for those on Medicare.
- “With fewer and fewer retiree health plans covering dental benefits, we are ushering in a population of people with less coverage and who are less likely to routinely see a dentist. We need to think about cost-effective solutions to this problem,” he said.
