How Will Businesses and the Insurance Industry Respond to the Growing Threat of Climate Change?
The ability of the global insurance industry to manage society’s risks likely will be significantly impacted by climate change in coming years. The ClimateWise report recently confirmed that since the 1950s the frequency of weather-related catastrophes has increased six-fold. As these risks occur more often, previously insurable assets are becoming uninsurable, and those already underinsured are further compromised. The overall consequences can be far reaching and as yet, we are not able to comprehend the vast nature of the risk.
Even more recently there are reports that climate change may affect far reaching businesses, such as the airline industry. Airline insiders have warned that climate change may have a significant impact on future air travel if worst-case projections of an increase in average temperature of 5.5º Fahrenheit occurs by the year 2100. Due to the fact that warming air lessens the ability of airplane wings to generate lift, airlines may be forced to cut the load of passengers, cargo and/or fuel. Airlines have already been forced to delay and cancel flights due to extreme temperatures.
Notably, Congress this month declared climate change a national security threat. The bill requires that the Pentagon deliver a report to Congress detailing the impact of climate change on the armed forces. The climate change report also is to list ten military bases most vulnerable to rising oceans, increase flooding, wild fires, and other effects of climate change.
Clearly, climate change will affect the obvious risks, but will also impact many businesses that are less directly related.