Climate Change Going to Start Hitting You In Your Pocketbook

Few understand the reality of climate change better than the insurance industry and one of the industry's biggest re-insurers, Munich Re, says people will soon have to pay a lot more to protect their most valued possessions.  The company warns that premiums could become too expensive for many ordinary people.

Ernst Rauch, Munich Re's chief climatologist put it this way:

“If the risk from wildfires, flooding, storms or hail is increasing then the only sustainable option we have is to adjust our risk prices accordingly. In the long run it might become a social issue,” he said after Munich Re published a report into climate change’s impact on wildfires. “Affordability is so critical [because] some people on low and average incomes in some regions will no longer be able to buy insurance.”

Nicolas Jeanmart, the head of personal insurance, general insurance and macroeconomics at Insurance Europe, which speaks for 34 national insurance associations, said the knock-on effects from rising premiums could pose a threat to social order. 

“The sector is concerned that continuing global increases in temperature could make it increasingly difficult to offer the affordable financial protection that people deserve, and that modern society requires to function properly,” he said. 

Munich Re’s insurance cover in hurricane-prone regions such as Florida is already higher than in northern Europe, by an order of magnitude.

...It may also influence several court cases testing the liability of fossil fuel companies for the effects of global warming. 

Dr Ben Caldecott, the director of Oxford University’s sustainable finance programme, said: “Company directors and fiduciaries will ultimately be held responsible for avoidable climate-related damages and losses and urgently need to up their game to avoid litigation and liability.” 

Munich Re has divested its large thermal coal holdings. However, it maintains some gas and oil investments.