After one of the worst Atlantic hurricane seasons in history, the world’s biggest insurers say the industry needs to get its act together if it wants to survive climate change.
Insuring against weather natural disasters could reach unaffordable levels for households and companies, while the potential damage is so unpredictable it may be impossible to model—an unacceptable risk to insurers.
“Sometime in the future there will be the situation where people cannot afford any longer to buy catastrophe insurance—this is what we want to avoid,” Ernst Rauch, the head of the Corporate Climate Centre at Munich Re. The world’s largest reinsurer suffered a 1.4 billion-euro ($1.63 billion) loss after hurricanes Harvey, Irma and Maria sent claims soaring.
Contrary to Warren Buffett’s view that climate change will spur demand for coverage and boost profit at his insurance companies, the risk is the opposite unfolds as shifting weather patterns render disaster-prone areas uninsurable.
The onus of bearing the expense of rebuilding after hurricanes, floods and earthquakes already falls disproportionately on governments.
