Our thoughts are with the millions of people facing devastating damage
from Hurricane Sandy. In addition to the damage to our homes, businesses and
communities, Sandy is expected to cost a shocking $7-15 billion in insured
losses alone. Even worse: the rest of the tab – and projections are as
high as $50 billion – will be born mostly by taxpayers.
Nobody expected a hurricane to make landfall in the U.S. this late in the
year, and particularly not in the mid-Atlantic or Northeast. But if the last
few years are any indication, these extreme weather patterns are becoming
the “new normal”.
Since 2005, Ceres has been urging insurance companies to reckon with the economic implications of increasingly unpredictable and extreme weather induced by climate change. Our recent report, Stormy Futures: The Growing Costs and Risks of Extreme Weather Events, highlights the financial impact of increased droughts, wildfires, and flooding, and forecasts continued losses unless insurers
incorporate climate risk into their underwriting and pricing strategies. But it’s not just the insurance companies that are on the hook – as insurers retreat from the highest-risk areas, it will be the government and the taxpayers paying the bill for damages wrought by extreme weather.
In the past, insurers have led the way in pushing for new codes and regulations that have minimized losses and saved lives: from fire codes and sprinklers in cities and towns in the 19th century to mandatory seat belt laws in the 1980s. Today, the insurance industry must again use its influence to advocate for climate-friendly legislation and measures to improve resilience, such as building communities in safer areas and moving electrical equipment in buildings from basements to higher floors.
It’s no longer a question – the economic impacts of climate change are being felt today and will continue to escalate dramatically unless we take action now. Ceres will continue to push the pivotal insurance industry to reckon with the realities of climate change and take leadership action to put our economy on a sustainable path.