Whilst here in the UK, the weather has always been a hot topic for conversation, we now also talk about the ramifications of global warming and climate change. This affects us all and how it will affect the generations to come is a matter of some debate. Most people are concerned with the here and now – and amongst those who monitor climate change closely is the insurance industry. This may come as a surprise to many people, but it is actually not difficult to understand why insurance companies are so concerned about climate change. It poses a very real risk to insurance companies.
Uncertain and unsettled weather patterns and natural disasters can equal large scale chaos, loss of life and widespread damage to both land and property. This in turn can equal large insurance pay outs. With their expertise in risk analysis, insurers are therefore well placed to lead the fight against what is arguably the largest man made risk of our time. Naturally, insurers have a financial interest in climate change, with their business model and potential losses at the mercy of the climate and weather. Increasing emissions can lead to drastic changes in our atmosphere with weather patterns becoming increasingly extreme.
Amazingly, a 10% increase in hurricane speeds could see annual damage cost double. For example, Hurricane Katrina saw the US insurance industry left with over 1.7 billion insurance claims across six states. It has been reported that the insurance industry paid out around $41.4 billion. Nearer to home, flooding in Cumbria in 2009 resulted in around 25,000 flood and storm damage insurance claims: according to the Association of British Insurers around £174 million was paid out.
During the past few years, the insurance industry has become increasingly pro-active with regards to climate change. In 2007 a worldwide initiative driven by leading insurers was established to help reduce climate change. Leading insurance companies came together to form ClimateWise. With their experience and expertise in risk analysis this collective aims to help governments and consumers alike to make informed and educated choices to help reduce climate change. This involved incorporating climate change into their ongoing strategies, both from an underwriting perspective and in the investment of premiums received. The key objective is to reduce economic risk associated with climate change and their main aims are to:
> Lead in risk analysis
> Inform public policy making
> Support climate change awareness amongst customers
> Incorporate climate change into investment strategies
> Reduce the environmental impact of their business
> Report and be accountable.
This demonstrates that the insurance industry is doing all that it can to actively help us all with regard to future premium costs and claims caused by our changing environment. As we anxiously watch the weather forecasts we can at least be certain that there are plans in hand to meet the changes we encounter.
When you next need to consider your buildings and contents insurance, remember to check all aspects of your property with regards to weather and storm implications – such as from flood or subsidence, for example. If you have any questions, call Westhill Insurance Services: as an independent insurance company they will listen you your requirements, offer advice as needed and then search the market for the right policy for you, at the right price. The weather may indeed be changing, but Westhill Insurance Services has always provided a first class, professional and friendly service and this you can be assured of, whatever the weather.
Contact Westhill Insurance Services, today.