Prepare for climate change, insurers warned - Insurance - Money - The Independent

Prepare for climate change, insurers warned

The Association of British Insurers has warned that premiums in the home, motor and health insurance markets are set to rise significantly over the next few decades, as the effects of global warming begin to set in.

The Association of British Insurers has warned that premiums in the home, motor and health insurance markets are set to rise significantly over the next few decades, as the effects of global warming begin to set in.

In a report published this week, written by Andrew Dlugolecki, a former insurance industry executive and academic, the ABI warns its members not to underestimate the effects of climate change on their businesses, advising them to start adapting now. The report says claims for storm and flood-related damage have already doubled to more than £6bn since 1998, and predicts this figure could triple to almost £20bn by 2050. Premiums for home insurance, particularly those that provide cover against weather-related damage, have already begun to increase as a result.

Longer, hotter summers - predicted to occur in two out of every three years in the future - are also set to take their toll, as subsidence cases increase.

Motor insurance premiums could also rise as a result of climate change, with early signs already starting to emerge of an increase in claims resulting from weather-related accidents. The report warns that this trend could accelerate.

In the health insurance market, Dr Dlugolecki says the increase in pollution and heat stress in summer could eventually contribute to reduced longevity and higher premiums.

"Managing the impacts of climate change is a major challenge for society," said John Parker, the ABI's head of general insurance. "Insurers must be equipped to analyse the new risks arising from climate change, and to help customers protect against them. This report provides the industry with a platform to ensure that appropriate action is taken by insurers, government and other stakeholders to effectively manage climate change."

Steve Kingshott, head of home insurance at More Than, said many people are already finding it hard to find flood cover. "Whilst some insurers are starting to use new technology to help them understand the risk of flooding," he said, "a lot of others are still using crude risk assessment methods. As a result many homeowners are unable to find suitable cover, even if they are not in a high-risk area."

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