Climate Change and Insurance, Part 1

Jason Thistlethwaite talks about how insurers are adapting to climate change. (Runtime: 2 min, 09 sec)

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Jason Thistlethwaite of the University of Waterloo discusses how insurers are adapting to climate change, and the role governments have to play in reducing climate-related risks.

Related Article: Insurers unprepared for extreme weather: University of Waterloo study

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Text Transcript

My name is Jason Thistlethwaite. I’m an assistant professor in the faculty of environment at the University of Waterloo.

How have insurers adapted to the increasing frequency and severity of weather events? For the most part, insurers price risk as it occurs. So this increase in the frequency and severity of weather events has largely led to a more restricted ability of insurance in Canada.

This is, of course, particularly the case for basement flooding, which is the most frequent and costly claim that insurers face. So for those people who live in areas where the frequency of flooding is high, insurance is going to be scarce, and it’s going to be costly.

That’s not a good thing for the consumer or the industry, so I think there’s an opportunity here to start looking for ways to ensure that insurance remains available and affordable, particularly in those high-risk areas where people need it most.

There are expectations that the insurance industry is going to play a leadership role in managing climate change risk, and it may be worthwhile reining in those expectations, mainly because they aren’t going to be able to do it alone.

The availability and affordability of insurance is wholly dependent on effective government policy and making sure we don’t do things like increase development in high-risk areas, and that we’re actively reducing exposure in some of these high-risk areas where climate change risk is likely to increase.

And unless governments—on behalf of property owners and taxpayers—are willing to play their role, I don’t think it’s fair to expect that insurers do the same either. So climate change risk management in the insurance industry is only going to be effective if government decides to lead the way.


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