What's up with climate change?
Insurance companies are highly sophisticated gamblers. Gamblers will take risks in return for money, but only to a degree. They like predictable risks. The unpredictable, scary and costly aspects of climate change are a challenge for all of us, and uniquely so for insurance consumers. United Policyholders is helping consumers adapt as insurers move quickly to protect their profits and their shareholders in anticipation of the extreme weather events and rising sea levels associated with climate change.
We are closely monitoring the many ways insurers and reinsurers are changing their operations and we are creating new tools and resources to help people contend with these changes and continue to protect their assets in the here and now. Insurance companies are leaving segments of the marketplace, raising rates and deductibles and adding exclusions that drastically reduce coverage for water and other forms of property damage. As a result, an increasing number of property owners throughout the nation are finding themselves between a rock and a hard place. In response, UP is working with partners in coastal areas to help long-time low and moderate income residents and small business whose lender-required policies have become unaffordable and/or too bare-bones to provide adequate protection. We are also assisting elderly and long-time residents of wooded areas who are experiencing severe economic hardship because they can't find or afford insurance on their homes.
And United Policyholders is serving as a voice for consumers where decisions related to insurance and climate change are being made by regulators, public officials and industry leaders. United Policyholders has been engaged in consumer advocacy and public policy work at the intersection of climate change, extreme weather events and insurance since 2007. At that time, with support from the Rockefeller Family Fund, we helped launch the first Climate Risk Disclosure Survey through which regulators in some states are now monitoring the data insurance companies are gathering. We added a Rebuilding and Repairing Green unit to our Roadmap to Recovery educational workshop program in 2008.
While we agree that the cost of insurance should reflect actual risk, and understand the rationale for eliminating subsidized rates for policies on properties in repeat loss and environmentally sensitive areas, people need help adapting. We don't want people losing homes to foreclosure and becoming homeless because the cost of their insurance suddenly jumps from $800 to $8,000 a year and they can't afford the cost or find a buyer willing to pay the high insurance pricetag. We are advocating for measured, balanced solutions that protect the victims of climate change while facilitating sound decision-making and resiliency.
Principles UP supports:
- Regulators need to maintain order in property insurance markets and prevent price gouging
- Consumers need help contending with affordability, availability, and mitigation financing challenges due to climate change
- Insurers should be partnering with their customers by providing technical guidance on mitigation, discounts and incentives for risk reduction and reduced emissions
- "Green" insurance products that allow property owners to repair and rebuild using sustainable materials and heating/cooling systems
On the positive side, some insurers are engaged in promoting sustainable development, green building practices and "pay as you drive" incentives that reward drivers for driving less.
Publications and Advocacy:
Resources and Links:
Government and Academia