Insurance

How Does Climate Change Affect Insurance?

Climate change is beginning to increase risks for insurance companies. As extreme weather events increase in frequency and magnitude, insurers must consider evaluating direct costs, like property damage and business interruptions from a variety of weather events, such as hurricanes or floods for example. Accurately quantifying damage is important for insurers to adjust risk models, set premiums, and ensure resilience as climate change-induced risks are on the come up. Insurers and governments can collaborate to develop adaptive insurance strategies that can deal with challenges related to climate change events, like changing precipitation patterns, increased sea levels, and more heatwaves.

Case Study: Losses By Floods

Floods are an evidently major loss for many businesses, families, states, countries, etc. As climate change becomes more rampant, so do floods, which is why it's important to quantify the financial losses due to floods.

Error creating thumbnail: File missing

Here, we can observe the flood payments by state, with Washington coming in as the greatest amount of payment due to floods due to climate change.

Error creating thumbnail: File missing

Here, we can see the money lost within each community due to flood payments due to climate change.

References

FEMA