Canberra Times (Australia): Extreme weather patterns are causing, and will continue to cause, significant property damage across Australia. The question of "who pays" is becoming a serious issue for insurance companies and governments alike. Global warming is contributing to unpredictable and violent weather patterns. While it will never be possible to definitely attribute a severe weather catastrophe to climate change, it increases the conditions that foster these types of events.…Two major questions arise for the industry: 1) How does climate change affect the industry where historically people who have suffered loss have relied upon insurance for financial support? 2) As climate change has introduced an era of instability, can insurance companies offer innovative solutions rather than simply increase premiums?
Insurers have historically adapted to change. However , the environment is now constantly changing and different permutations of the impact and damage are influencing our understanding of risk. The insurance industry has managed risk in the past because it has been able to adequately assess it and build a policy framework around it. Managing and regulating climate change-related risk relies heavily upon the availability of accurate, relevant and updated information. Yet in the face of such unpredictable change it will be become increasingly difficult to determine risks.
Insurance is a form of risk regulation. Through policies, insurance companies can modify behaviour by demanding that certain standards, such as adaptive measures, are met before an applicant may invest in a policy. Currently, victims of the effects of climate change catastrophes rely on pay-outs that are no longer viable as the experience of severe weather activity escalates…
Typhoon Odessa from 1985, NASA, Wikimedia Commons
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