Climate change and your insurance

Why climate change matters

Growing evidence suggests that climate change is worsening through droughts and other severe weather events, such as hurricanes, tornadoes, floods and wildfires. These natural disasters can destroy homes, cars, businesses and crops, leading to more and larger insurance claims.

As a result, insurers in some parts of the country have stopped offering coverage, and others have limited what they cover. It’s also meant higher insurance premiums that many people cannot afford, leaving them uninsured or underinsured.

Commissioner Kreidler doesn’t want to see that happen in Washington state. He believes we must take action today to make sure we are protected in the future.

2013 Climate Risk Survey (www.insurance.ca.gov): Washington and four other states required insurance companies with more than $100 million in premiums to respond. More than 1,000 insurance companies responded and Commissioner Kreidler wrote the foreward for the report. The survey results show:

  • Roughly 75 percent of insurers have a plan for identifying climate change-related risks that could affect their business, and are taking actions to mitigate these risks.
  • Nearly every insurer is aware of the risks posed by a changing climate.
  • An overwhelming majority of insurers have incorporated mitigating practices into their business model.

On Oct. 22, 2014, the climate-change group Ceres released its report evaluating the 2013 climate risk survey results. The report, Insurer Climate Risk Disclosure Survey Report & Scorecard: 2014 Findings & Recommendations.

The report ranks insurers' preparedness to address the risks presented by climate change. The report found that only nine property and casualty insurers are well prepared. Health and life and annuity insurers are largely unprepared to address climate change risks.

Leading the nation

Commissioner Kreidler chairs the National Association of Insurance Commissioners’ (NAIC) Climate Change and Global Warming Working Group (www.naic.org), formed to:

  • Review risk-management efforts by carriers and how they may be affected by climate change.
  • Investigate the use of modeling by carriers and their reinsurers concerning climate change and its possible impact on insurers' investments.
  • Review the impact of climate change on insurance investments.

Commissioner Kreidler has called on all state insurance regulators to participate in the annual climate risk survey with Washington and other states.

Past reports

In 2007, Commissioner Kreidler testified before the U.S. House of Representatives to discuss the issue and to push for proactive solutions. Read his testimony.

In June 2008, Commissioner Kreidler surveyed home and business insurers about their efforts to address the potential risks that climate change poses to insured losses.

In September 2012, Ceres released a report examining the potential effects of climate change on U.S. property and casualty insurers (wwww.ceres.org). Commissioner Kreidler wrote the foreword to the report.

In November 2012 Commissioner Kreidler authored an article on Adaptation and the Insurance Industry (www.climateactionprogramme.org) for the Climate Action report for the United Nations' COP18 meeting.

In March 2013, Ceres released Insurer Climate Risk Disclosure Survey: 2012 Findings & Recommendations based upon a climate risk disclosure survey of 184 insures from all segments of the industry. The survey, which was administered by insurance departments in California, New York and Washington, was mandatory for insurers that reported more than $300 million in premium for 2011 and voluntary for insurers reporting less.

Updated 10/23/2014

See also

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