The Insurance Industry Was "Realistic" About Climate Risks; Now Multiple Industry Associations Denying There's A Problem

[hatrack]

In the wake of the devastating wildfires in Los Angeles in January 2025, the effect of climate change on the insurance industry was detailed in a report by the U.S. Treasury Department. In what it called the most comprehensive snapshot of the homeowners insurance market to date, the agency wrote in its press release that “homeowners insurance is becoming more costly and harder to procure for millions of Americans as the costs of climate-related events pose growing challenges to insurers and their customers alike.” Researchers including those at the Harvard Business School echoed that conclusion: “Climate change is causing turbulence in homeowner insurance markets, as a growing number of extreme weather events dramatically drive up costs.”

In 2024, there were 27 confirmed weather and climate events in the U.S. each with losses exceeding $1 billion, according to the National Oceanic and Atmospheric Administration. But insurance industry groups have resisted supporting climate regulations by questioning the link between higher premiums and climate change, according to a new report from InfluenceMap, a transparency advocacy nonprofit. The group concluded that “industry groups questioned the climate risk implications for the insurance sector, asserted that insurers have proven they can sufficiently manage climate risks, and posited that natural catastrophe events are not frequent enough to require additional guidance or regulation.”

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The Global Federation of Insurance Associations questioned whether the frequency of natural disasters required a change in insurers’ business models. “These events occur reasonably rarely, so it would be a waste of resources to scale up permanently waiting for the next one to occur,” it said, according to InfluenceMap’s report. When the International Association of Insurance Supervisors suggested that insurers could be required to consider the potential effects of climate change in their investments, as well as how those investment decisions could negatively affect climate change, the groups pushed back. None of the industry groups examined by InfluenceMap supported incorporating climate factors into their investment activities. Among them was the Institute of International Finance and Insurance Europe, whose members include Allianz, Swiss Re and Zurich Insurance Group.

Insurance Europe found the proposal “quite prescriptive” and the Global Federation of Insurance Associations questioned why climate-related risks should be considered systemic. “It is unclear why [significant investment exposure to assets that are vulnerable to climate-related risks] is characterized as ‘systemic risk.’ … Moreover, it would seem appropriate for insurance supervisors to be equally cautious about concentrations in ‘green’ investments.”

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https://capitalandmain.com/as-climate-crisis-upended-homeowners-insurance-the-industry-resisted-regulation

[cachukis]

1. Ostrich syndrome or i can't figure.