The famous insurance group Lloyd’s released a recent report which reads like something out of the intro to a post-apocalyptic thriller:
“A systemic shock to global food supply could trigger significant claims across multiple classes of insurance, including (but not limited to) terrorism and political violence, political risk, business interruption, marine and aviation, agriculture, product liability and recall, and environmental liability.”
They’re right to be so worried; climate change will make life for insurance companies very difficult. On top of those problems mentioned above, increased coastal storms will cause beachfront property insurance to skyrocket. Droughts will cause fire insurance prices to balloon. Rising sea level will drive up insurance prices throughout coastal cities.
It may seem as though higher premiums would be beneficial to insurance agents, but the inflation reflects the number and cost of projected payouts–profits would remain largely the same. Worse still for the industry is that as insurance rates climb and approach the cost of fixing any problems oneself, people will stop purchasing insurance, and profits will tank.
The report is one of the first from the private sector to speak so gravely about climate change. Hopefully Lloyd’s serves as an example to the rest of the insurance world, an industry with powerful connections in politics and government.
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