Climate change implications for life and health insurers expected to increase over time

A new report from the Geneva Association, an association of insurance and reinsurance CEOs founded in 1973, finds that climate change impacts for life and health insurers have not been significant as of yet, but they are likely to increase as climate change incidents become more frequent and severe.

“Extreme weather events cause severe damage to homes and buildings, but they also cause injury and death,” writes Jad Ariss, managing director of the Geneva Association. He adds that climate change also reduces biodiversity, impacts food supplies and exacerbates the spread of diseases, even to regions that were previously unaffected. “The climate crisis itself has become a mental health issue,” he adds. “Working to better understand and reduce these risks will help keep them insurable.” 

Mortality and morbidity impacts 

The report, Climate Change: what does the future hold for life & health insurance? looks at the effects of climate change on mortality and morbidity, how insurers should approach evolving health risks, and categorizes morbidity and mortality risks into four groups: Acute, chronic, transition and litigation. Among the report’s recommendations, the Geneva Association says insurers should close data gaps on climate-related health risks. “To improve understanding of future risks, health and life insurers must draw from a wider set of stakeholders to assemble multi-sectoral data to understand areas of vulnerabilities,” the report states.

Insurers are also encouraged to innovate, particularly with parametric products, and prioritize prevention by incentivizing behaviours that reduce risk. Finally, the report encourages the industry to play a bigger role in policy development. “Insurers can expand their contributions in this space by building the stock of data on climate-related health risks, developing innovative products and strengthening public understanding.” 

The report also provides a thorough overview of the research available on the topic. 

“Property and casualty insurers are experiencing a surge in claims for damage to homes, buildings and infrastructure. Far less explored and understood are the health-related impacts of climate change and what they mean for insurers,” the Geneva Association states. “While the short-term consequences for health and life insurers have so far been modest, it may be erroneous to assume it will remain that way.”