As changing weather patterns continue to cause catastrophic events such as flooding, it should come as no surprise that the climate change narrative is widely accepted among insurers.
“Insurers are among the front line, and the industry has said that people who debate the effect of climate change, well, there seem to be very few of those people in the industry,” says Leonard Sharman, senior communications consultant at The Cooperators.
“For decades, it has been on insurers’ radar screens, and the industry has taken action to address it in a lot of ways, and it’s a complex and monumental challenge.”
However, despite the widespread acknowledgement among the industry, insurers often face road blocks at the municipal level says Sharman, as cities and towns are retroactively coping with decades-old planning decisions.
“It hits our bottom line and we take it seriously,” he says. “That might be a little different than with municipalities with land use planning, drainage planning. They’re doing it differently than they were 20, 30 years ago, for sure – but they can’t go back in time. The consequences of past decisions are what we need to live with.”
“You can change an insurance policy, but you can’t undo land use from decades ago.”
He adds that disaster related payments have doubled every five to 10 years over the past two decades with no slowdown in sight – a reality insurers are working to connect with government on. However, Sharman adds that the current process of reacting with financial aid to disasters won’t be enough to mitigate true damage.
“Disaster assistance is sort of back-loaded. It provides compensation after an event like Fort McMurray or the Alberta flooding,” he says.”The insurance industry would generally like to see more investment in the front end.”
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