Tackling the Unforeseen Environmental Risks of Climate Change
Climate change has fundamentally altered the risk landscape for both insurers and insureds. Wildfires, flooding, droughts and extreme storms are becoming increasing more prevalent in both their frequency and severity. The US was hardest hit, with large stretches of the East Coast pummeled by hurricanes, wildfires in the west, and the Midwest struck by a record number of convective storms.1 These natural, or named peril, events in an aggregate for the insurance industry are causing more frequent catastrophic losses for carriers from business interruption, claims handling, and replacement costs.
Exacerbation of the increased costs has arisen from the materials required to carry out such restoration of property which have become increasingly more expensive due to the scarcity caused by the Covid-19 crisis. In particular, wood and other building materials integral to construction and reconstruction have ballooned the costs to repair properties to like or similar conditions prior to the natural event.
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