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An annual scorecard for insurance companies has revealed that they are “fundamentally misunderstanding” the risks posed by climate change. The report, released by the campaign group Insure Our Future, found that over the last 20 years, climate change has been responsible for more than a third of all weather-related insurance losses, totaling an estimated $600 billion. This immense price tag has been passed on to policyholders, with insurance providers struggling to keep up with the escalating costs.
The report highlights the urgent need for action to address climate change, as the frequency and severity of extreme weather events continue to increase. In 2024 alone, estimated losses from natural disasters are expected to exceed $135 billion. This year, the UK saw $190 million in insured losses from Storm Henk’s extreme rainfall, which is estimated to have been made four times more likely by climate change. Europe also experienced its second-highest insured losses from flooding ever recorded.
The report warns that insurance companies are failing to recognize the role of greenhouse gas emissions in driving up losses. Over the last decade, losses attributed to climate change have risen from 31% to 38% of all weather-related losses. This highlights the crucial role of decarbonization in tackling soaring insurance costs.
The report also raises concerns about the accessibility of insurance for vulnerable communities. As insurance companies struggle to manage rising costs, they are increasing premiums or even withdrawing coverage from high-risk areas. This leaves many communities without essential protection against climate-related disasters.
The report also highlights the role of insurance companies in fueling the problem of climate change. By underwriting fossil fuel expansion, insurance companies are contributing to the growth of emissions. This is becoming economically dubious for insurance firms, as the report’s analysis of 28 top global property and casualty insurers found.
Overall, the report emphasizes the need for urgent action to address climate change and its impacts on the insurance industry. Failure to do so could have devastating consequences for both insurers and the communities they serve.