Premium Costs Will Rise as Climate Changes, Insurer Warns

Premium Costs Will Rise as Climate Changes, Insurer Warns

The world’s largest reinsurance firm, Munich Re, is sounding the alarm that changes to the climate could make insurance too expensive for many people.

Munich Re blamed global warming for the more than $20 billion of losses that have occurred in California wildfires the past two years, saying decades of observational data was “broadly consistent with climate change.”

Talking to The Guardian newspaper Munich Re’s chief climatologist Ernst Rauch says that the costs could soon be widely felt, with premium rises already under discussion.

“If the risk from wildfires, flooding, storms or hail is increasing then the only sustainable option we have is to adjust our risk prices accordingly,” Rauch said after Munich Re published a report into climate change’s impact on wildfires. “Affordability is so critical [because] some people on low and average incomes in some regions will no longer be able to buy insurance.”

Wetter winters spurred new forest growth which became tinder dry in heatwave conditions that preceded the wildfires, the Munich Re report said.

No insurer had linked wildfires to climate change before.

However, climate scientists say that linking extreme weather events to climate change is the same as attributing the performance of a steroid-taking athlete to drug use – the connections are more apparent when looking at patterns than in individual disasters.


A charred car sits in front of a home burned to the ground during a wildfire in Redding, CA. Image via Shutterstock