Why do Brokers Have A “Moral Responsibility” To Address Climate Change?
According to the World Property and Casualty Report, the previous three decades have seen a 250% spike in global economic losses brought on by climate change. In a similar vein, 73% of policyholders list climate change as one of their top concerns.
US state regulators and lawmakers are also closely monitoring the effects of climate-related risks and are growing increasingly concerned about how the insurance sector will react to climate change.
S&P Global Sustainable1 reported that the U.S. insurance business has $582 billion invested as of year’s end 2019 in a variety of oil, gas, coal, utilities, and other fossil fuel-related activities, a modest rise from $519 billion in 2018.
Insurers may have a harder time striking a balance if catastrophic weather conditions persist between managing financial stability and assuring affordability and availability.
“While most insurers acknowledge climate change’s impact, there is more to be done in terms of demonstrative actions to develop climate resiliency strategies,” said John Berry, CEO of Efma.
“As climate change spirals out of control, a rising number of firms and households will no longer be able to acquire insurance,” said Peter Bosshard, director of The Sunrise Project’s finance program, “and brokers need to bear these long-term interests of their customers in mind.”
Although there are several significant hazards associated with climate change that insurance brokers should take into account, such as greenwashing, operational and financial resilience and larger reputational concerns from neglecting to disclose climate threats, there are also numerous business opportunities.
Most importantly, brokers should think about extending their advice function to include climate-related due diligence and collaborate with insurers to develop new products to fill the climate protection gap.
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