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. As insurers raise prices, drop customers and pull out of entire regions in order to protect their profits and shareholders in anticipation of the extreme weather events and rising sea levels associated with climate change, policyholders need United Policyholders' help more than ever.
UP has been doing advocacy 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 so that regulators could monitor insurer research and actions related to climate change and help consumers adapt. Since then we've continued to create tools and resources to help people understand the situation and continue to protect their assets in the here and now. Not only are insurance companies are leaving segments of the marketplace and raising rates: They are transferring risk back to consumers through higher deductibles and new exclusions that drastically reduce coverage for water and other forms of property damage.
Insurance industry reactions to climate change has left an increasing number of people and businesses between a rock and a hard place: They can't afford to pay for the increased cost of the policy their lender requires them to maintain, they can't sell their property because of the new, high insurance price tag, and their job requires them to stay where they are. So UP is working with partners in coastal areas to help long-time low and moderate income residents and small businesses whose lender-required policies have become unaffordable and/or too bare-bones to provide adequate protection.
We are also assisting elderly/fixed-income and long-time residents of rural areas who are experiencing severe economic hardship because they can't find or afford insurance on their homes. 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
We commend insurers that are engaged in promoting sustainable development, green building practices and "pay as you drive" incentives that reward drivers for driving less.
To help disaster victims rebuild and repair "green", we added a Rebuilding and Repairing Green unit to our Roadmap to Recovery educational workshop program in 2008.